These cargoes are “carbon neutral” which means that all emissions from exploring for and producing the natural gas, to the use by the final consumers are offset by credits from a variety of nature-based projects including Shell supported afforestation projects from Qinghai and Xinjiang provinces in China. CNOOC also plans to auction these two carbon neutral LNG cargoes through the Shanghai Petroleum and Gas Exchange, offering many downstream gas buyers a choice to decarbonise their energy use.

Commenting on the agreement, Steve Hill, EVP Shell Energy stated “We are very excited and humbled to be working alongside our trusted partner CNOOC in bringing the first carbon neutral LNG cargoes to Chinese Mainland. We are particularly pleased to be able to also use credits from projects in China for China. Using nature-based credits in conjunction with LNG is a unique solution to support the needs of Chinese gas customers looking to decarbonise their energy use.”

Ye Guobiao, Chairman of Shanghai Petroleum & Gas Exchange stated, “The auction of carbon neutral LNG through a trading platform is an innovation worldwide. SHPGX will supervise transaction organization, performance guarantee, and settlement arrangements, so that the domestic users can fully, efficiently, quickly and safely participate in the purchase of "net zero carbon" natural gas resources”.

Wu Wenlai, Chairman of CNOOC Gas & Power said, “As the largest LNG importer in China, CNOOC aims to provide reliable, sustainable, safe, green and low-carbon energy product. We are very delighted to work with our trusted partner Shell for delivering the first carbon neutral LNG in Chinese Mainland through this innovative solution. Credits used to offset emissions for this LNG are also from local projects and besides combating climate change, will help guard our clear waters and green mountains and eliminate poverty.”

Natural gas is the cleanest form of energy from fossil fuels, emitting between 45 and 55% fewer greenhouse gas emissions and less than one-tenth of the air pollutants than coal when used to generate electricity. Nature-based projects protect, transform or restore land, enable nature to add oxygen and absorb CO2 emissions from the atmosphere and protect biodiversity. Besides restoring the ecosystem, the credits from projects in Qinghai and Xinjiang provinces may also increase the added value of forestry in China as well as providing alternative sources of income to local communities.

* The terms “carbon neutral”, “carbon off-set” or “carbon off-set compensation” indicate that Shell has engaged in a transaction to ensure that an amount of carbon dioxide equivalent to that associated with the production, delivery and usage of the fuel has been removed from the atmosphere through a nature-based process or emissions saved through avoided deforestation. Further information on Shell’s Net Carbon Footprint ambition and investments in natural ecosystems.

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