Qatar secures second major LNG supply deal with China

Under the deal, China will purchase four million metric tonnes of LNG annually from Qatar.

Qatar has signed a 27-year gas supply deal with China National Petroleum Corporation (CNPC), the Gulf nation’s second major gas supply deal with a Chinese state-controlled company in less than a year.

QatarEnergy and CNPC signed the agreement on Tuesday under which China will purchase four million metric tonnes of liquefied natural gas (LNG) annually from the Gulf Arab state.

CNPC will also take an equity stake in the eastern expansion of Qatar’s North Field LNG project.

The stake is the equivalent of five percent of one LNG train with a capacity of eight million tonnes per 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,” Saad al-Kaabi, the Gulf state’s energy minister and CEO of QatarEnergy, said.

In an identical deal, QatarEnergy sealed a 27-year supply agreement with China’s Sinopec in November for four million tonnes of LNG a year.

Asia, with an appetite for long-term sales and purchase agreements, has been ahead so far in securing gas from Qatar’s massive production expansion project.

Tuesday’s deal is QatarEnergy’s third deal to supply LNG from the expansion to an Asian buyer.

Qatar is the world’s top LNG exporter, and competition for LNG has ramped up since the start of the war in Ukraine, with Europe, in particular, requiring a large quantity to help replace Russian pipeline gas that used to make up almost 40 percent of the continent’s imports.

QatarEnergy had previously said it could give up to five percent stakes in the gas trains linked to its North Field expansion to what al-Kaabi 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 percent stake in the North Field expansion, which will cost at least $30bn, including the construction of liquefaction export facilities.

As Beijing’s ties with the United States and Australia, Qatar’s two biggest LNG export rivals, are strained, Chinese national energy firms increasingly see Qatar as a safer target for resource investment.

SOURCE: AL JAZEERA AND NEWS AGENCIES

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