Beijing November 13 2023: The LNG contract signed by China National Offshore Oil Corp. (CNOOC) and Abu Dhabi National Oil Co. (ADNOC) earlier this month, for 12 cargoes with a delivery period of 2024-2025, was priced at a discount to Platts JKM, sources said Nov. 10.
The contract was for 500,000 mt per annum for 2024-2025 at a discount to Platts JKM -- the benchmark price reflecting LNG delivered to Northeast Asia, sources familiar with the matter told S&P Global Commodity Insights.
CNOOC declined to comment on the term deal when reached out by S&P Global while calls to the ADNOC group and its unit ADNOC LNG did not elicit a response until the time of publication of this article.
Deals indexed to Platts JKM are typically done against the average of JKM for the month of delivery.
The contract was signed on Nov. 6, as reported by S&P Global earlier.
Sources said that the deal was negotiated by ADNOC Trading, the trading arm of ADNOC, with the LNG likely coming from another subsidiary ADNOC LNG. This explains the rationale behind the usage of the Platts JKM-linked deal price, according to market sources.
A Middle Eastern source said that the trading arm had earlier traded cargoes in the spot market and a slew of them were linked to Platts JKM.
Historically, the Middle East-based companies selling LNG have nearly solely used Brent crude-linked prices in term deals, but in recent transactions, an increased openness to using LNG benchmarks and gas hub pricing has been observed.
The trend mirrors a similar activity adopted by state-owned oil companies in the last decade, which saw top Middle East LNG producers holding active trading arms in the natural gas markets.
The deals that ADNOC has signed with PetroChina, JERA and JAPEX were all linked to Dated Brent, a source familiar with the transactions said.
Platts JKM was assessed at $15.962/MMBtu on Nov. 10 for December, according to data by S&P Global.
Platts JKM calendar year 2024 derivative was assessed at $16.50/MMBtu and calendar year 2025 derivative was assessed at $15.075/MMBtu on Nov. 10, the data showed.