<article><p class="lead">Chinese state-controlled importer Sinopec is seeking to cut its 2016 term offtake from the 9mn t/yr Australia-Pacific LNG (APLNG) plant by around 10pc.</p><p>The firm has sought to reduce term deliveries during discussions with APLNG for its annual delivery programme (ADP) for next year. LNG term contracts typically include upwards and downwards quantity tolerance clauses that allow for an increase or reduction of annual deliveries within a 10pc range. </p><p>Sinopec has term contracts with APLNG to load 8.6mn t/yr of supplies. The contracts were expected to start around early 2016 but this could not be confirmed. APLNG is expected to load and export its first cargo this month. Sinopec also holds a 25pc equity share in APLNG. Japan's Kansai Electric Power is the plant's other term customer with an deal for 1mn t/yr. Australian utility group Origin Energy and US ConocoPhillips each own a 37.5pc stake in APLNG, operating the plant's upstream and downstream components respectively.</p><p>Weak downstream gas demand, brought on by mild weather, a weaker economy and increasingly cost-attractive alternative fuels, have led to growing Chinese LNG inventories, particularly as new term supply contracts start. Besides Sinopec's offtake from APLNG, state-controlled firm CNOOC also started agreements this year with UK energy firm BG for 8.6mn t/yr of LNG. Most of the supplies will come from the BG-operated 8.5mn t/yr Queensland-Curtis LNG (QCLNG) in east Australia. CNOOC owns a 50pc stake in QCLNG's first production train, with BG holding the remaining half.</p><p>CNOOC was also possibly seeking reduced offtake from BG in 2016 via ADP discussions. Market participants said the cut to term deliveries next year could be more than the typical 10pc limit. A CNOOC source declined to confirm this, but said it was "not impossible" because of weak downstream gas demand and comfortable inventories. But any downwards revision of term deliveries would not be more than 10pc, the source said. CNOOC has also sold via tenders at least three QCLNG cargoes on the spot market. The latest tender, for a 25-26 December loading QCLNG cargo, was awarded about a month ago at a mid- to high-$7/mn Btu level. </p><p>In an apparent bid to boost domestic gas demand, China's main economic planning body the NDRC <a href="https://direct.argusmedia.com/newsandanalysis/article/1138797">cut commercial natural gas prices for the country's manufacturing sector</a> by 0.70 yuan/m³ ($3/mn Btu) from 20 November. </p><p>Chinese spot LNG demand is expected to be limited this winter, traditionally a peak demand season, because of cold weather driving demand for gas-fired power generation. Other northeast Asian consumer buyers like South Korea's state-controlled Kogas are also keeping their spot LNG buying limited, although demand from portfolio participants, trading firms and state-controlled importers in Pakistan, India and the Middle East are supporting prices.</p></article>
