Copy of 2023-04-12T103608Z_1966862498_RC2YC0AXRS7I_RTRMADP_3_QATARENERGY-CHINA-1681297012163
QatarEnergy CEO Saad al-Kaabi and Ma Yongsheng, Chairman of the Board of Sinopec sign during North Field East Partnership Agreement Signing Ceremony in Doha. Image Credit: via REUTERS

Doha: Sinopec has bought into a liquefied natural gas project in Qatar in a bid to bolster the energy security of China, the world’s second-largest buyer of the fuel.

At a signing ceremony in Doha, Sinopec “- officially known as China Petroleum & Chemical Corp. “- agreed to take a 5 per cent stake in a train with a processing capacity of 8 million tons a year. It’s part of the North Field East LNG export project that’s under construction and is expected to begin shipping gas in 2026.

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Cooperation with QatarEnergy will help “optimize China’s energy consumption structure and enhance the security, stability and reliability of clean energy supply,” Sinopec Chairman Ma Yongshen said at the event on Wednesday.

The investment marks the first time China has directly backed an LNG plant in Qatar, one of the world’s top exporters. It’s also the latest in a flurry of deals to lock-in gas supply for decades amid intensifying global competition for the fuel, particularly between Europe and Asia. Japan is currently the world’s primary buyer of LNG.

In November, state-owned Sinopec signed a $60 billion contract to buy 4 million tons of LNG a year. The deal will last for 27 years, making it China’s longest LNG supply agreement to date, according to data from BNEF.

Long-term partners

Ma said Wednesday that he hopes Sinopec will continue to explore new LNG cooperation opportunities with QatarEnergy. Qatar is the second-largest supplier of the fuel to China, after Australia.

Sinopec is better-known for its oil refining operations than its upstream prowess, as the company typically leaves drilling activities to its sister firms, China National Petroleum and China National Offshore Oil. Still, Sinopec owns a 25 per cent stake in the Australia Pacific LNG export plant on Curtis Island.

Several European states have attempted to secure more LNG from Qatar, as Russia’s attack on Ukraine has disrupted gas flows to the continent for much of the past year. However, their reluctance to sign long-term contracts and agree to fixed -destination clauses has stymied negotiations with the Middle Eastern country.

QatarEnergy is “prioritizing long-term strategic partners from China,” CEO Saad Al-Kaabi said Wednesday.

ConocoPhillips, Shell, TotalEnergies, Exxon Mobil and Eni are also investors in North Field East, which will increase Qatar’s LNG export capacity to 110 million tons a year from 77 million tons.