TotalEnergies has signed preliminary terms to supply 900,000 metric tons a year of liquefied natural gas to China's Jiangsu Guoxin Group for 15 years starting in 2028, the companies said on Wednesday, one day after the French group agreed to take up to 1.6 million tons of LNG from Abu Dhabi's ADNOC Gas.

The two deals place TotalEnergies between a Gulf producer expanding its LNG sales and a Chinese provincial importer with a new receiving terminal. For Asian gas distributors and utilities, contracted volumes are the alternative to a spot market that has turned expensive. The Japan Korea Marker (JKM), the benchmark for LNG delivered to Northeast Asia, averaged $22.80 per million British thermal units in the third quarter, nearly double the $11.70 of a year earlier, according to TotalEnergies' third-quarter results.

Jiangsu Guoxin's 15-year TotalEnergies agreement

The deal is not yet a binding supply contract. TotalEnergies called it a heads of agreement and said the 2028 start is subject to finalizing the sales and purchase agreements. The statement gave no pricing terms.

Jiangsu Guoxin, a provincial state-owned group, plans to use the gas for city gas supply and flexible power generation, according to TotalEnergies. Cargoes would go to the group's new LNG terminal in Rudong. The companies described Jiangsu as China's second-largest province by both gross domestic product and natural gas consumption.

If finalized, the deal would add to TotalEnergies' existing book in China. In November 2024 the company announced a 15-year deal to supply 2 million tons a year to China Petroleum & Chemical Corp., or Sinopec, also starting in 2028, Rigzone noted. Together the two agreements would cover 2.9 million tons a year of TotalEnergies sales into China from that year.

Chinese buying this autumn has split along company lines. Platts reported in late October that a Chinese national oil company had secured winter cargoes to meet heating demand and storage-filling targets, while the country's second-tier importers stayed on the sidelines because spot prices were high. The JKM topped $30 per million British thermal units on Oct. 19 for the first time since December 2022, and an Asian market source told Platts that conditions favored demand destruction in China and South Asia, through lower imports and switching to other fuels.

ADNOC Gas supply and the Hormuz bypass question

ADNOC Gas announced its side of the trade on Tuesday: a five-year agreement to supply TotalEnergies with up to 1.6 million tons of LNG in total. TotalEnergies, a shareholder in the Abu Dhabi-listed company, expects first deliveries this year. Stéphane Michel, TotalEnergies' president for gas, renewables and power, cited the supply's "perfect location between Europe and Asia" as support for the group's role as a major LNG portfolio supplier.

The sale is part of a wider push by Abu Dhabi National Oil Co. to expand its LNG sales abroad. ADNOC launched a global LNG marketing and trading platform in Abu Dhabi Global Market in July, combining the LNG marketing of ADNOC Gas and XRG with the trading arm ADNOC Trading, and is targeting 47 million tons a year of marketable LNG beyond 2030, according to ADNOC Gas and Enerdata. In October, ADNOC signed a sales and purchase agreement to supply about 2 million tons a year to Thailand's Gulf Group from 2027, Enerdata reported.

More capacity is coming. The Ruwais LNG project, with two production trains of 4.8 million tons a year each, is expected to more than double the United Arab Emirates' LNG capacity when it starts in 2028, Rigzone reported. TotalEnergies owns 10% of it.

Hormuz still weighs on LNG from the Gulf: TotalEnergies said the Middle East conflict's remaining hit to its output, under 5% of production, mainly reflects limited LNG exports through the strait. For crude, ADNOC is weighing a third oil export pipeline from the UAE's western coast to the port of Fujairah, outside the Strait of Hormuz, and has told some customers in Asia about the plan, Bloomberg reported on Wednesday, citing people familiar with the matter. An ADNOC spokesperson told Bloomberg the report was "not accurate and purely speculative."

ADNOC's existing line to Fujairah can move about 2 million barrels a day, and the company said in May that it was speeding up a second line, due next year, that would double that capacity, according to Bloomberg. Some Asian refiners have been told they could collect crude delivered through the new link at Fujairah in early 2027, the news agency reported. The port has been attacked several times during the Iran war. The UAE left the Organization of the Petroleum Exporting Countries in May.

TotalEnergies' LNG growth plan

TotalEnergies wants natural gas to make up close to half its sales mix by 2030, the company said, and expects the LNG volumes it manages to grow 50% between 2025 and 2030, according to Rigzone. On Monday it agreed to take a 30% operating stake in the Lang Lebah and B14 gas fields off Sarawak, which are planned to feed the Malaysia LNG plant.

Prices, more than volumes, are driving its LNG earnings for now. TotalEnergies sold 9.8 million tons of LNG in the third quarter, 9% less than in the second quarter, though nine-month sales rose 4% to 32.9 million tons, its results release showed. Adjusted net operating income in the Integrated LNG segment rose to $1.885 billion from $807 million in the second quarter, and the company said it expects its average LNG selling price to rise above $14 per million British thermal units in the fourth quarter as pricing formulas catch up with recent moves in oil and gas.

The next numbers from the supply side arrive on Nov. 10, when ADNOC Gas reports third-quarter results. Jiangsu Guoxin's first TotalEnergies cargoes, planned for 2028 if final sales contracts are signed, would arrive in the year Ruwais LNG is scheduled to start.