Commodities trading company Trafigura has signed a long-term natural gas purchase agreement with NuVista Energy, giving the mid-sized Canadian producer exposure to international liquefied natural gas (LNG) market prices , the two companies said Friday.
NuVista will supply 21,000 million British thermal units per day (MMbtu/d) of natural gas to Trafigura, with the purchase price indexed to the Japan Korea Marker (JKM) for a period of up to 13 years from from January 1, 2027.
The JKM is the benchmark LNG price assessment for physical spot cargoes in Asia and the agreement opens access to global LNG markets for Calgary, Alberta-based NuVista at a time when LNG prices Canadian gas are in difficulty.
“For more than a decade of growth, we have prioritized the diversity of our natural gas sales locations across North America to maximize returns from our condensate-rich natural gas,” said Jonathan Wright, CEO of NuVista, in a press release.
“We are extremely excited to enter the global LNG markets.
NuVista produces approximately 83,000 barrels of oil equivalent per day (boed) in Canada's Montney region, one of North America's premier shale plays.
The agreement with Trafigura continues a recent trend of Montney area producers signing agreements to increase their exposure to LNG markets. Canada does not yet have any LNG export terminals, but the LNG Canada project, led by Shell, is expected to come online next year and two other smaller terminals are under construction.
Trafigura also signed a seven-year purchasing agreement with Canada's largest natural gas company, Tourmaline Oil Corp, in January, while producer ARC Resources entered into a supply agreement with LNG company Cheniere Energy last year.
