For a duration of 27 years

Qatar signs new LNG supply agreement with China

REUTERS/JASON LEE - El emir de Qatar, el Jeque Tamim bin Hamad Al Thani y el presidente de China, Xi Jinping
REUTERS/JASON LEE - Qatar's Emir Sheikh Tamim bin Hamad Al Thani and China's President Xi Jinping

China National Petroleum Corporation will purchase four million metric tonnes of liquefied natural gas (LNG) annually from Qatar's QatarEnergy for 27 years. The deal is the second major pact made by Qatar with a Chinese national company so far this year. The supply of liquid natural gas will start in 2026.  

The deal, signed on Tuesday 20 June, also includes the acquisition of a stake in the eastern expansion of the North Field LNG project. Specifically, a 5% stake in a train with a capacity of eight million tonnes per year. 

China's Sinopec was the first to become part of the North project with the acquisition of a 1.25% stake in the world's largest liquefied natural gas project with the Qatar North Field East expansion. Both projects will help meet China's gas demand.

AFP/ KARIM JAAFAR - Ciudad Industrial de Ras Laffan, el principal lugar de Qatar para la producción de gas natural licuado y gas a líquido, administrado por Qatar Petroleum, a unos 80 kilómetros al norte de la capital Doha
AFP/ KARIM JAAFAR - Ras Laffan Industrial City, Qatar's main site for the production of liquefied natural gas and gas-to-liquids, managed by Qatar Petroleum, about 80 kilometres north of the capital Doha

One of the parties to the deal is China National Petroleum Corporation, an energy company engaged in oil and gas production, the world's third largest oil company in terms of revenue. A predecessor of the Ministry of Petroleum in China, it has oil and gas operations in more than 30 countries. On the other hand, QatarEnergy is a state-owned public corporation whose main activities correspond to all phases of the Qatari monarchy's oil and gas extraction and production line. 

Since the outbreak of the war in Ukraine, competition for liquefied natural gas has increased, as has European countries' search for alternatives to Russian gas. While Qatar has only signed a long-term agreement with Germany in view of the shortages caused by the Ukrainian conflict, China has been able to secure two major projects so far this year with Doha, which seeks economic stability over a prolonged period of time, rather than short-term European deals that seek a replacement for Russian gas.

Qatar is one of the world's largest exporters of liquefied natural gas and is heavily dependent on oil and gas production. Liquid natural gas accounts for 31.2% of Qatar's exports, while liquid propane and oil account for 27% and 26% respectively. Long-term gas exploitation and export agreements are the basis of the Qatari economy, making the long-term agreements proposed by Beijing more attractive than the European ones. According to AlArab, Energy Minister and CEO of Qatar Energy Saad Al-Kaabi claims to have both partners in mind, and wants to be able to share gas production evenly between east and west, thus diversifying its market. 

Australia and the US are also two of the largest exporters of LNG, accounting for 23.1% and 18.2% of global exports respectively. Given the tensions between the US and Australia with China, Qatar is the obvious alternative for the Asian giant, where investment in resources has been increasing over the years and Qatar is seen as a safe haven for clean energy investment.