Ahad Tariq
2 min read
In This Article:
The energy giant BP p.l.c. (NYSE:BP) confirmed on Thursday that it had signed a contract with China-based Zhejiang Energy Group. The two companies met at the 29th World Gas Conference on May 21, which sees BP supplying Zhejiang Energy with 1 million mt/y for 10 years.
BP p.l.c. (NYSE:BP) has recently re-focused its attention to its core business of fossil fuels, from alternative or renewable energy. In 2023, BP and China's Zhejiang Energy group agreed on a joint venture for LNG sales in China. The setting up of an SPAC, with the specific aim of selling trucked LNG, has proven beneficial for both companies. This agreement sees the two companies starting to build on that success and extend their strategic partnership.
China's Zhejiang Energy Group has signed similar agreements with other companies. It signed a deal with Exxon to supply 1 million mt/y of LNG for 10 years, which saw deliveries begin in 2022. Experts on the matter stated the deal is also linked with fluctuating global oil prices, with the aim of mitigating risks due to geopolitical tensions between Russia and Europe, as well as changes in supply by OPEC+, led by Saudi Arabia.
As the energy company is refocusing its attention (and its investment plan) on the traditional oil and gas business (and away from renewables), there could be an opportunity for BP p.l.c. (NYSE:BP) to either shed non-core renewable assets or strike a merger deal with another production-focused energy company.
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