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According to a statement by A2A, the firm will purchase up to 10 LNG cargoes, equivalent to approximately 1 billion cubic meters of natural gas, from BP per year from 2027 to 2044.
The volume will be supplied to A2A on both a delivered ex-ship (DES) and a free on board (FOB) basis.
Under the terms of the SPA, BP will provide A2A with LNG from its global portfolio.
A2A said the LNG supplies will be received and regasified at the OLT Offshore LNG Toscana terminal in Livorno, Italy, where A2A has secured multi-year regasification capacity through an auction, as well as other terminals in Europe.
The contracted LNG supply will meet around 20 percent of A2A’s demand, accorring to the firm.
Alongside the LNG SPA, the two companies will work together to enable A2A to optimize shipping capacity for a portion of the volume.
During the final years of the agreement, A2A expects lower domestic gas consumption, meaning part of the supply may be redirected to other markets, it said.
“The geopolitical instability that has long characterized the global scenario has highlighted the need to consolidate Italy’s energy supply system, which is still highly dependent on foreign sources via pipeline,” Renato Mazzoncini, CEO of A2A said.
“In the coming years, gas will continue to play a significant role in the security of the national system, balancing the intermittency of renewables through thermoelectric production, which is increasingly efficient thanks to next-generation combined cycle plants with efficiencies above 60 percent,” Mazzoncini said.
BP boosting LNG business
Jerome Milongo, who took over as the new head of LNG trading at BP last year, said BP sees LNG as an “essential part” of the energy transition.
“Europe is a significant LNG market and this agreement with A2A expands our existing supply arrangements to the region and will strengthen long-term security of supply in Italy,” he said.
Prior to this agreement, BP signed a long-term LNG supply deal with India’s Torrent Power.
Under this deal, BP Singapore will supply up to 0.41 mtpa of LNG to Torrent Power from 2027 to 2036.
BP also signed a 10-year LNG supply deal with China’s Zhejiang Energy.
Under the agreement, BP will supply up to 1 million tons of LNG per year to Zhejiang Energy on a DES basis from its diversified global LNG portfolio.
BP’s LNG portfolio continues to grow, and the company’s Greater Tortue Ahmeyim FLNG project, located offshore Mauritania and Senegal, recently launched commercial operations.
Last year, BP’s CEO Murray Auchincloss said the company expects its LNG supply portfolio to increase to more than 25 mtpa by 2025, beating its previous target.
BP previously set a target of 25 mtpa of LNG by 2025. In 2019, the company’s LNG portfolio was at 15 mtpa and in 2019 it rose to 17 mtpa.