PanaTimes

Friday, Feb 03, 2023

China signs 27-year gas deal with QatarEnergy to secure supply

China signs 27-year gas deal with QatarEnergy to secure supply

Since Russia’s invasion of Ukraine, competition for LNG has become intense with nations trying to replace Russian supply.

QatarEnergy has signed a 27-year deal to supply China’s Sinopec with liquefied natural gas (LNG) in the longest such agreement to date, as volatility drives buyers to seek long-term supplies.

Since Russia’s invasion of Ukraine in February, competition for LNG has become intense, with Europe, in particular, needing vast amounts to help replace Russian pipeline gas that used to make up almost 40 percent of the continent’s imports.

European companies looking to buy LNG needed to look at how Asian buyers were approaching their own negotiations and were willing to lock into long-term deals, QatarEnergy chief Saad al-Kaabi told the Reuters news agency shortly before signing the Sinopec deal.

“Today is an important milestone for the first sales and purchase agreement (SPA) for North Field East project, it is 4 million tonnes for 27 years to Sinopec of China,” al-Kaabi said.

“It signifies long-term deals are here and important for both seller and buyer,” he said in an interview in Doha, adding that the deal was the LNG sector’s largest single sales and purchase agreement on record.

The North Field is part of the world’s biggest gas field that Qatar shares with Iran, which calls its share South Pars.

QatarEnergy earlier this year signed five deals for North Field East (NFE), the first and larger of the two-phase North Field expansion plan, which includes six LNG trains that will ramp up Qatar’s liquefaction capacity to 126 million tonnes per year by 2027 from 77 million.

It later signed contracts with three partners for North Field South (NFS), the second phase of the expansion.

Monday’s deal, confirmed by Sinopec, is the first supply deal to be announced for NFE.

“This takes our relationship to new heights as we have an SPA that will last into the 2050s,” al-Kaabi said.

“It sends a message that a lot of Asian buyers are actually approaching us to have a long-term deal because they see the volumes of gas that are coming in the future are less and less.”


Long-term supply


al-Kaabi said negotiations with other buyers in China and Europe who want to have supply security were ongoing.

Qatar is already the world’s top LNG exporter, and its North Field expansion project will boost that position and help guarantee long-term supplies of gas to Europe as the continent seeks alternatives to Russian flows.

“The recent volatility has driven buyers to understand the importance of having long-term supply that is fixed and that’s reasonably priced for the long term,” al-Kaabi said.

“There aren’t many projects that are taking final investment decision and the next two big chunks of LNG capacity that are coming into the market is Golden Pass LNG that we partnered with ExxonMobil in Texas and the next big chunk if you will is North Field East and North Field South.”

al-Kaabi also said there was more realisation globally that gas should be an essential part of any energy transition.

“The wind doesn’t blow all the time and the sun doesn’t shine all the time,” he said, adding that Qatari LNG is “a solution that has the least carbon intensity”.

The pricing of the Sinopec deal will be similar to others in the past that were linked to crude oil.

“The way we’re pricing our deals with Asia is crude linked. We’ve done it this way in the past and that’s the mechanism we’re using going forward.”

The deal was signed on an ex-ship basis, meaning QatarEnergy will provide the shipping and delivery of the LNG.

al-Kaabi added negotiations for an equity stake in the Gulf country’s expansion project were ongoing with several entities.

The supply contract is a key component for an integrated partnership in the NFE, Sinopec said in a statement, indicating it could be involved in stake negotiations.

QatarEnergy has maintained a 75 percent stake overall in the expansion and could give up to a 5 percent stake from its holding to some buyers, al-Kaabi said.

“Important buyers that want to commit for the long term on a substantial volume want to see part of the benefits of the upstream business … so I think it’s an important win if you will and it makes the partnership even more solid.”

Newsletter

Related Articles

PanaTimes
Close
0:00
0:00
EU found a way to use frozen Russian funds
First generation unopened iPhone set to fetch more than $50,000 at auction.
WARNING GRAPHIC CONTENT - US Memphis Police murdering innocent Tyre Nichols
House Speaker Kevin McCarthy said he will block Reps. Adam Schiff and Eric Swalwell from serving on the House Intelligence Committee
Almost 30% of professionals say they've tried ChatGPT at work
Interpol seeks woman who ran elaborate exam cheating scam in Singapore
What is ChatGPT?
Bill Gates is ‘very optimistic’ about the future: ‘Better to be born 20 years from now...than any time in the past’
Tesla reported record profits and record revenues for 2022
Germany confirms it will provide Ukraine with Leopard 2 tanks
Prince Andrew and Virginia Giuffre Photo Is Fake: Ghislaine Maxwell
Opinion | Israel’s Supreme Court Claims a Veto on Democracy
Moonwalker Buzz Aldrin Gets Married On His 93rd Birthday
Who’s Threatening Israeli Democracy?
Federal Reserve Probes Goldman’s Consumer Business
China's first population drop in six decades
Microsoft is finalising plans to become the latest technology giant to reduce its workforce during a global economic slowdown
Tesla slashes prices globally by as much as 20 percent
1.4 Million Copies Of Prince Harry's Memoir 'Spare' Sold On 1st Day In UK
After Failing To Pay Office Rent, Twitter May Sell User Names
Lisa Marie Presley, singer and daughter of Elvis, dies aged 54
FIFA president questioned by prosecutors
Britain's Sunak breaks silence and admits using private healthcare
Hype and backlash as Harry's memoir goes on sale. Unnamed royal source says prince 'kidnapped by cult of psychotherapy and Meghan'
Saudi Arabia set to overtake India as fastest-growing major economy this year 
Google and Facebook’s dominance in digital ads challenged by rapid ascent of Amazon and TikTok
FTX fraud investigators are digging deeper into Sam Bankman-Fried's inner circle – and reportedly have ex-engineer Nishad Singh in their sights
TikTok CEO Plans to Meet European Union Regulators
France has banned the online sale of paracetamol until February, citing ongoing supply issues
Japan reportedly to give families 1 million yen per child to move out of Tokyo
Will Canada ever become a real democracy?
Hong Kong property brokerages slash payrolls in choppy market
U.S. Moves to Seize Robinhood Shares, Silvergate Accounts Tied to FTX
Effect of EU sanctions on Moscow is ‘less than zero’ – Belgian MEP
Coinbase to Pay $100 Million in Settlement With New York Regulator
FTX assets worth $3.5bn held by Bahamas securities regulator
A Republican congressman-elect is under investigation in New York after he admitted he lied about his education and work experience.
Brazilian football legend Pele, arguably the greatest player ever, has died at the age of 82.
Hong Kong to scrap almost all its Covid rules
EU calls screening of travellers from China unjustified
US imposes Covid testing for visitors from China
Ukraine President Volodymyr Zelenskyy Addresses Joint Session of Congress - FULL SPEECH
Where is Rishi? Chancellor Jeremy Hunt's excuses about the UK's economic challenges just don't make sense
Former FTX CEO Bankman-Fried finally arrested in Bahamas after U.S. files charges
Corruption works: House Financial Services Chair Waters doesn't plan to subpoena her donor, Sam Bankman-Fried, to testify at hearing on FTX collapse
Ronaldo's new contract...
Prince William's godmother resigns honorary royal role after exposing her/their racism
Tax fraud verdict again exposes illusion of Trump the master businessman
Tax fraud verdict again exposes illusion of Trump the master businessman.
Yellen hints at ‘national security’ probe into Twitter purchase
×