Markets have been concerned for the past week that Chinese oil giant Sinopec, which is also a 25% partner in APLNG, may be unable to take all its contracted gas from the project in Queensland, and will struggle for find spot buyers.

Last week Credit Suisse claimed that the Origin Energy/ConocoPhillips-run LNG project at Gladstone could come under threat amid speculation that Sinopec was attempting to renegotiate its APLNG deal because it was yet to complete construction of an import terminal in the southern Guangxi province to receive the gas.

Sinopec is contracted to take almost all of the 8.6 million tonne per annum output of APLNG, however the Asian gas market is in a glut and gas prices are falling.

Japan's Kansai Electric is purchasing the balance.

Market watchers are concerned Sinopec could attempt to pressure Origin (37.5%) and ConocoPhillips (37.5%) to cap production from the Gladstone LNG projects, which is still to be commissioned.

This morning Origin noted the speculation about the 7.6MMtpa Sinopec supply agreement and said while the terms of the contract were confidential, it has confirmed that the sales and purchase agreement is structured as a take-or-pay agreement, which means Sinopec must pay for the gas even if it doesn't use it.

"As is typical under these types of agreements, there is flexibility for Origin and ConocoPhillips, through Australia Pacific LNG, to determine the start date for supply of LNG to Sinopec under the SPA," Origin said in a statement.

"This is intended to occur after successful commissioning to ensure that the project can meet its obligations to supply cargoes under the SPA."

Origin says it is already contracting commissioning cargoes under short-term agreements, and has contractual flexibility in terms of where Sinopec can take the cargoes in order to manage the build-up of key infrastructure and markets.

"As the SPA is structured on a free-on-board basis, any exercise of this flexibility by Sinopec would not impact Australian Pacific LNG's rights under the SPA.

"Origin expects that Sinopec will fulfil its obligations under the SPA. The Australia Pacific LNG project remains on track for sustained production from Train 1 in the second quarter of the 2016 financial year."

Sinopec would need approval from APLNG to be able to re-sell the gas outside of China but that would depress prices in the already weak spot market.