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China's Sinopec seeks long-term LNG as prices remain low

(Reuters) - China's Sinopec is seeking LNG for delivery over a 10-year period to take advantage of the current low prices as gas demand has fallen because of the coronavirus pandemic.

Sinopec, officially named China Petroleum & Chemical Corp, is seeking 1 million tons of LNG a year for delivery over 10 years starting from 2023, said six industry sources.

Offers are due by Friday and will remain valid until mid-August, one of the sources said.

Sinopec declined to comment.

The firm is likely seeking long-term LNG at a time when prices for both long-term contracts and spot cargoes are low, a second source said.

Asian spot LNG prices, which buyers are increasingly using as a gauge to negotiate their long-term contracts, are hovering near record lows.

Prices of long-term contracts that are typically priced on Brent oil are also being negotiated at lower levels.

"Expectations for long-term demand are still bullish so it's a good time to buy long-term cargoes," another of the sources, based in Beijing said, declining to be named as he was not authorised to speak with media.

"It's the lowest price range now and so is a good time to discuss long-term deals."

Sinopec is also looking for volumes from the United States as part of the tender requirement, a fourth source said.

Sinopec, expected to be the next major Chinese buyer of U.S. LNG, had been in discussions with Houston-based Cheniere Energy to sign a 20-year deal but Reuters reported in January that both companies were planning to review terms of the deal after a sharp drop in prices.

China's long-term gas demand is expected to grow, stoked by the country's push to shift to the cleaner fuel from coal.

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