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Energy and Resources Exxon Mobil signs framework agreement to supply LNG to Zhejiang Energy for 20 years

Exxon Mobil Corp said on Thursday it signed a framework agreement for a liquefied natural gas (LNG) supply deal with Zhejiang Provincial Energy Group, the Chinese company’s first long-term supply deal.

Peter Clarke, the president of Exxon Mobil gas and power marketing, inked the 20-year supply deal in a signing ceremony during the International Petroleum and Natural Gas Enterprise conference at Zhoushan, in Zhejiang province, the company said in a statement.

The Chinese company will receive 1 million tonnes of LNG per year from Exxon Mobil under the agreement, Zhejiang Energy President Tong Yahui told Reuters on the sidelines of the event.

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Exxon Mobil said in the statement it will deliver the LNG starting in the early 2020s.

Exxon Mobil is stepping up its efforts to meet soaring LNG demand, coupling multi-billion dollar production projects around the world with its first mainland storage and distribution outlet.

LNG supplies to China would come from a combination of Exxon Mobil’s global portfolio - not necessarily from the United States - as the company boosts output from Papua New Guinea and Mozambique, Clarke said on the sidelines of the meeting.

State-owned Zhejiang Energy is a coal producer and utilities operator, and formed a joint venture earlier this year with commodities trader Glencore to trade energy products including LNG.

Zhejiang Energy is teaming up with state-owned Sinopec Corp to build a LNG receiving terminal near the city of Wenzhou in Zhejiang with a capacity of 3 million tonnes per year. The plant is planned for start up by the end of 2021.

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