China's Guangdong Energy Group is expected to start commercial operation of a new LNG receiving terminal in south China next week which U.S. major ExxonMobil has agreed to use under a 20-year agreement, two industry sources told Reuters on Thursday.

The $1 billion terminal in Huizhou in Guangdong province can handle 4 million metric tons a year of liquefied natural gas (LNG). It received its first cargo from the United Arab Emirates last month in a trial operation, the sources said.

ExxonMobil agreed last December to use the terminal to handle 1.8 million tons of the LNG per year under an 20-year deal with Guangdong Energy, a utility and gas importer backed by the provincial government, said one of the sources who has direct knowledge of the matter.

The sources declined to be identified as they are not authorised to speak to media.

An ExxonMobil China representative confirmed the agreement for terminal access, which the company had not previously announced.

The two sources said the agreement does not include an equity stake for Exxon.

Last year, Reuters reported that ExxonMobil was in discussions to invest in the LNG business in Guangdong province.

Exxon will use the terminal partly to supply gas to its fully-owned multi-billion-dollar chemical complex in Huizhou which is now in an advanced stage of construction and expected to start operation in 2025, the sources added.

Guangdong Energy began building the terminal around mid-2021. It includes three 200,000 cubic metre storage tanks and one berth capable to receive 266,000-cubic metre LNG tankers.

Guangdong, China's largest gas consumer by province, has built LNG receiving facilities with combined an annual capacity of 32.6 million tons, according to Chinese consultancy Sublime China Information.

by reuters