Shell has signed what it says is the world’s first term contract for carbon-neutral LNG with a unit of PetroChina.
Shell Eastern Trading signed the five-year agreement with PetroChina International, according to a Shell statement on Monday.
Furthermore, PCI on Monday received its first carbon-neutral LNG cargo at China’s Dalian port as part of the deal.
“For each cargo delivered under this agreement, PCI and Shell will cooperate to offset life-cycle carbon dioxide equivalent (CO2e) emissions generated across the LNG value chain, using high-quality carbon credits from nature-based projects,” the statement said.
With this deal, PetroChina would provide carbon-neutral gas to Chinese businesses but also households in line with China’s 2060 carbon-neutrality aspirations, it said.
“Important step” in scaling up carbon-neutral LNG market
“Since delivering the world’s first carbon-neutral LNG cargoes in 2019, we have collaborated with producers and buyers across the globe for 13 other carbon-neutral LNG cargoes,” Steve Hill, executive VP Shell Energy, said.
“This first term deal is an important step in scaling up the market for carbon-neutral LNG and we are very grateful to our valued partner PetroChina for their collaboration in enabling this industry milestone,” he said.
Economic growth but also supportive coal-to-gas switching policies have led China to become the world’s second-largest LNG importer, just behind Japan. In 2020, Chinese LNG imports reached 67 million tonnes.
In addition, China could overtake Japan as the world’s largest LNG importer by the end of this year.
Shell expects Chinese LNG imports to nearly double by 2040.