QatarEnergy signs second major natural gas supply deal with China

QatarEnergy has signed its second major natural gas supply deal with China in less than a year, with the state-owned energy company and China National Petroleum Corporation entering into a 27-year agreement for the delivery of 4 million tonnes of liquefied natural gas per year.

CNPC will also pick up a stake in the eastern expansion of Qatar's North Field LNG project.

The stake is the equivalent of 5 per cent of one LNG train with a capacity of 8 million tonnes per year, QatarEnergy said in a statement on Tuesday.

This will not affect the interests held by other shareholders in the project, it added.

“These agreements demonstrate our unwavering commitment to our customers and partners and to our shared ambition for a sustainable future facilitated by a cleaner, and more eco-friendly energy source that would catalyse substantial socio-economic development,” said Saad Al Kaabi, Qatar's Minister of Energy and chief executive of QatarEnergy.

QatarEnergy signed a similar deal with China Petroleum & Chemical Corporation, or Sinopec, in November.

Qatar, one of the world's largest LNG exporters, is looking to raise its production capacity to 126 million tonnes per year by 2027 amid surging global demand.

Global LNG trade hit a high of $450 billion in 2022 as Europe scrambled to secure supplies to replace Russian gas, according to the International Energy Agency.

Despite a rise in demand, LNG supply grew by only 5.5 per cent last year, mostly due to maintenance at large export terminals and as Freeport LNG’s Texas-based plant – one of the world’s largest export centres of the fuel – was shut down after a fire in June 2022.

After becoming the world’s largest LNG importer in 2021, China’s imports of the supercooled fuel fell by 20 per cent last year amid lower demand and high spot prices.

The International Energy Agency expects gas demand in China to increase by more than 6 per cent this year, supported by a recovery in economic activity.

China, the world’s second-largest economy, reopened its borders earlier this year after adhering to a strict zero-Covid policy for nearly three years.

“Our collaboration over the NFE [North Field Expansion] project represents a major achievement and excellent practice of both CNPC and QatarEnergy in delivering on the strategic consensus of the leaders of our countries,” said Dai Houliang, chairman of CNPC.

“It lays a solid foundation for the energy co-operation between the two sides in the next three decades.”

CNPC will continue to “actively” discuss co-operation with QatarEnergy across the hydrocarbon supply chain and other areas such as green and low-carbon energy, he added.

The US, which has emerged as Europe’s biggest LNG supplier, is projected to account for more than half of the global supply increase in 2023, according to the agency.

Freeport, which restarted operations earlier this year, can process up to 2.1 billion cubic feet of natural gas per day and export 15 million tonnes of LNG per year.