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Qatar to supply gas to China in the long term

Qatar announced on Monday a 27-year liquefied natural gas (LNG) supply agreement with China.

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Qatar announced a 27-year liquefied natural gas (LNG) supply deal with China on Monday, saying it was the “longest term” ever seen in the industry amid a global energy crisis caused by the war in Ukraine.

This announcement comes at a time when Europe is seeking to turn to alternatives to Russian hydrocarbons, without having reached such an agreement with the rich Gulf gas emirate.

State-owned Qatar Energy will export four million tons of LNG annually from its new North Field East project to Sinopec (China Petroleum and Chemical Corporation), Saad Sherida Al-Kaabi, Qatar’s energy minister, told a news conference.

The agreement spans “the longest duration in the history of the LNG industry,” boasted the official, who is also managing director of Qatar Energy.

Asia (led by China, Japan and South Korea) is the main market for Qatar’s gas, which has been increasingly courted by European countries since Russia invaded Ukraine.

But negotiations with the Europeans have been difficult, as Germany and other countries have refused to sign the kind of long-term agreements Qatar has with Asian countries.

North Field, which includes North Field South and North Field East, is central to Qatar’s strategy to increase its LNG production by more than 60% to 126 million tons per year by 2027.

Excellent relationships

Qatar is already one of the world’s leading producers of liquefied natural gas (LNG), along with the United States and Australia.

The offshore North Field is the largest natural gas field in the world that Qatar shares with Iran.

China is the first country to enter into a supply agreement for the North Field East.

Speaking by video conference from Beijing, Sinopec’s chairman Ma Yongsheng called the agreement “historic”, stressing that “Qatar is the world’s largest supplier of LNG and China is the largest importer”.

He also announced that he has “officially” requested in October 2021 a participation in the North Field South project, for the moment dominated by the Western energy giants: the American ConocoPhillips, the French TotalEnergies and the British Shell.

These three companies hold a 25% stake in the North Field South project, with Qatar Energy holding the remaining 75%.

A Chinese takeover of North Field South, “would further strengthen the excellent relations” between Beijing and Doha, said Kaabi.

Already very important, the economic relations between China and the Gulf countries, strategic partners of the United States and Europeans, have been particularly strengthened in recent years.

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