Qatar on June 20 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 tons of LNG a year (mt/year) from the Gulf Arab state.
CNPC will also take an equity stake in the eastern expansion of Qatar's North Field LNG project, QatarEnergy chief Saad al-Kaabi said at the signing.
The stake is the equivalent of 5% of one LNG train with capacity of 8 MMmt/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 MMmt/year. The state-owned Chinese gas giant also took an equity stake equivalent to 5% of one LNG train of 8 MMmt/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 MMmt/year by 2027 from 77 million.
June 20th'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.
DEALS WITH 'VALUE-ADDED PARTNERS'
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% of the continent's imports.
Reuters had earlier reported that CNPC was close to finalizing 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% 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% stake in the North Field expansion, which will cost at least $30 billion including 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.
The Qatar Investment Authority (QIA), the country's $445 billion sovereign wealth fund, will manage most of the revenues from the North Field expansion," Kaabi said.
"I think the majority of the revenue of what's going to come from this North Field expansion will go into a future generation wealth fund in QIA ... making sure that the Qatari people and people living in Qatar are well taken care of."
Recommended Reading
Oil, Gas Firms’ Rising Market Caps Bump Laggards Off S&P Indices
2024-06-10 - Private equity investment firm KKR & Co. Inc. is among energy-related firms joining the S&P 500 as their market capitalization grows.
Sempra Infrastructure Contracts with Bechtel for Port Arthur LNG Phase 2
2024-07-22 - Sempra Infrastructure has entered into a fixed-price engineering, procurement and construction contract with Bechtel at Sempra’s Port Aurther LNG Phase 2 project.
Caliche Receives Investment from Sixth Street for Expansion of Storage Facilities
2024-08-20 - The bulk of Sixth Street’s investment is focused on Caliche’s Golden Triangle Storage project in Beaumont, Texas, and its Central Valley Gas Storage in Princeton, California.
Diversified to Buy East Texas NatGas Assets from Crescent Pass
2024-07-10 - Diversified Energy’s $106 million deal with Crescent Pass Energy comes during a prolonged dip in natural gas prices that some analysts expect to rebound as demand ramps up for LNG exports and power demand.
TotalEnergies Joins Ruwais LNG Project in UAE
2024-07-11 - French energy giant TotalEneriges joined the two-train 9.6 million tonnes per annum Ruwais LNG project in the United Arab Emirates with a 10% interest. The LNG project is expected to start sending out cargos in the second half of 2028.