Shell inks contract to supply LNG to PetroChina for five years

Royal Dutch Shell has signed a five-year contract with PetroChina, the publicly-listed division of state-owned China Petroleum Corporation, for the supply of carbon-neutral Liquefied Natural Gas (LNG).

Many companies, especially those in fossil fuels are making use of tools such as carbon offsetting to compensate for emissions that cannot be cut operationally.

As part of the contract, both companies have agreed to "cooperate to offset life-cycle carbon dioxide equivalent (CO2e) emissions generated across the LNG value chain, using high-quality carbon credits from nature-based projects," said Shell.

"Nature-based projects" refers to projects such as reforestation, which helps to protect, transform or restore land and enable nature to add oxygen and absorb carbon dioxide emissions.

The announcement of the deal was made at PetroChina received its first LNG cargo delivery at the Chinese port of Dailan, Shell said.

Read more: The Long and Winding Road (to Net-Zero)

"This first term deal is an important step in scaling up the market for carbon-neutral LNG and we are very grateful to our valued partner PetroChina for their collaboration in enabling this industry milestone," Steve Hill, Executive Vice President Shell Energy said in a press release.

Shell said that the carbon offsets would come from its own portfolio of nature-based emissions reduction projects.

However, many climate groups are sceptical about carbon offsetting, arguing that being able to pay for emissions reductions means that the use of fossil fuels will be prolonged.

The 2015 Paris Agreement on climate change aims to cap the rise in temperatures to as close as possible to 1.5°C above pre-industrial times which scientists say will require transforming the world into a net-zero economy by 2050.

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