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Qatari LNG in demand from China’s CNPC
LNG TANKER - Ship at dawn moored to the gas terminal
China National Petroleum Corp (CNPC) is finalising a deal with QatarEnergy to buy liquefied natural gas (LNG) over 30 years from Qatar’s North Field project, Reuters reported.
The negotiation could be the second such deal between the world’s no.2 LNG buyer – China – and major LNG exporter – Qatar – as Beijing prepares to increase its gas supply, diversify its energy sources and cut carbon emissions.
CNPC appears to be following in fellow Chinese company Sinopec’s footsteps, which struck a deal late last year for the longest duration LNG supply contract Qatar had ever signed, whereby QatarEnergy will supply 4 million tonnes of LNG to the Chinese annually for 27 years.
CNPC is expected to secure the same terms as Sinopec, ensuring additional long-term supply from a well-positioned and reliable partner, insulating them from market volatility, ensuring better pricing and enabling their diversification of supply.
Rystad Energy analyst, Wei Xiong, told Reuters that although CNPC “dominates China’s piped gas imports, it still needs other import options to mitigate any potential risk, in line with China’s energy policy on supply diversification. Therefore, the deal will eventually strengthen the energy giant’s competitiveness”.
Qatar’s two biggest LNG export rivals, United States and Australia have strained relations with China, which pits Qatar in pole position as the safest resource investment. It has been suggested that the Chinese companies would not be gunning for such long-term contracts unless they also had interest in acquiring a small stake in the North Field.
QatarEnergy maintains a 75% stake in the North Field expansion project, expected to cost an estimated $30 billion, and could sell a maximum of 5% stake to some buyers, Saad al-Kaabi, CEO of QatarEnergy has said.
Last year, CNPC, China’s top gas importer, also increased gas imports from Russia, buying supply initially destined for Europe, refused by Europeans due to sanctions amid Moscow’s war on Ukraine.
Chinese imports of Qatari LNG jumped by 75% last year compared to 2021 to 15.7 million tonnes, equivalent to a quarter of the nation’s total imports.
“In contrast, imports from Australia and the United States to China dropped 30% and 77% respectively from 2021, to 21.9 million tonnes and 2.09 million tonnes” Reuters reported.
Last year, QatarEnergy signed deals with five of the majors, TotalEnergies, ExxonMobil, ConocoPhillips, ENI, and Shell, for or the North Field project, an expansion plan set to boost Qatar’s liquefaction capacity to 126 million tonnes per year by 2027.
