Qatar strikes second big LNG supply deal with China
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Qatar strikes second big LNG supply deal with China
DOHA (Reuters) - Qatar on Tuesday 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 liquefied natural gas (LNG) a 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 million metric tons a 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 million metric tons a year. The state-owned Chinese gas giant also took an equity stake equivalent to 5% of one LNG train of 8 million metric tons a 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 million metric tons a year by 2027 from 77 million.
Tuesday'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 finalising 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."
