Qatar strikes second big LNG supply deal with China
China will purchase 4 million metric tonnes of LNG a year from the Gulf Arab state
Doha: Qatar on Tuesday secured its second large gas supply deal with a Chinese state-controlled company in less than a year, putting Asia clearly ahead in the race to secure gas supplies from Doha’s massive production expansion project.
China National Petroleum Corporation (CNPC) and QatarEnergy signed a 27-year agreement, under which China will purchase 4 million metric tonnes of LNG a year from the Gulf Arab state.
CNPC will also take an equity stake in the eastern expansion of Qatar’s North Field liquefied natural gas (LNG) project, QatarEnergy chief Saad Al Kaabi said at the signing.
The stake is the equivalent of 5 per cent of one LNG train with the capacity of 8 million tonnes a year.
“Today we are signing two agreements that will further enhance our strong relations with one of the most important gas markets in the world and key market for Qatari energy products,” Kaabi said.
In an identical deal, QatarEnergy sealed a 27-year supply agreement with China’s Sinopec in November for 4 million tonnes a year. The state-owned Chinese gas giant also took an equity stake equivalent to 5 per cent of one LNG train of 8 million tonnes a year capacity.
Asia, with an appetite for long-term sales and purchase agreements, has outpaced Europe in locking in supply from Qatar’s two-phase expansion plan that will raise its liquefaction capacity to 126 million tonnes a year by 2027 from 77 million.
Tuesday’s deal will be QatarEnergy’s third deal to supply LNG from the expansion to an Asian buyer.
Other Asian buyers are also in talks for equity stakes in the expansion, Kaabi said.
Qatar is the world’s top LNG exporter and competition for LNG has ramped up since the beginning of the war in Ukraine, with Europe in particular needing vast amounts to help replace Russian pipeline gas that used to make up almost 40 per cent of the continent’s imports.
Reuters had earlier reported that CNPC was close to finalising a deal to buy LNG from QatarEnergy over nearly 30 years from the North Field expansion project.
QatarEnergy had previously said that it could give up to 5 per cent stakes in the gas trains linked to its North Field expansion to what Kaabi, the Gulf state’s energy minister and CEO of QatarEnergy, described as “value-added partners”.
In April, China’s Sinopec became the first Asian energy company to become a “value-added” partner in the project.
QatarEnergy has also signed equity partnerships on the project with international oil companies but has said it plans to retain a 75 per cent stake in the North Field expansion, which will cost at least $30 billion including construction of liquefaction export facilities.