China’s state-owned oil and gas company Sinopec is in discussions with Pembina Pipeline Corp for a liquefied natural gas (LNG) offtake agreement and equity stake in the Canadian company’s proposed Cedar LNG project.
Cedar would be one of Canada’s first LNG export terminals, costing roughly $4 billion and producing 3 million metric tons of LNG per annum (MTPA) after completion in 2028, pending a final investment decision by mid-2024. It is a joint venture between Haisla First Nation and Pembina.
Sinopec is in talks to purchase 1.5 million tons annually of Cedar LNG production under an offtake owned by Pembina, according to two sources. Sinopec is also in discussions for an equity stake in the project.
Sinopec has shown interest in Canadian LNG export projects in the past, as it is keen to monetize gas assets it acquired from Petronas in 2014, including gas fields in northeastern British Columbia. The company was left with the local Canadian market after Petronas dropped its plans for the Pacific Northwest LNG facility in 2017.
The sources say Sinopec is under pressure from the Chinese government to find a way to make the Canadian upstream gas assets more profitable, and investing in the Cedar LNG project is a logical strategy for the company.
Sinopec has been expanding its global portfolio in recent years, including investing in refining and petrochemical projects in Sri Lanka and Saudi Arabia, as well as gas projects in Qatar and Canada. The Cedar LNG project would provide Sinopec access to Asian markets and reduce its reliance on U.S. gas sales.