China’s Sinopec signs long-term LNG supply deal with Qatar

CHINA’S Sinopec signed a long-term deal for supplies of liquefied natural gas (LNG) from Qatar, as the world’s second-biggest economy looks to bolster its energy security in the coming decades.

State producer Qatar Energy will send Sinopec four million tonnes of LNG a year starting in 2026, the companies announced in a virtual ceremony on Monday (Nov 21). The deal will last for 27 years, making it China’s longest LNG supply agreement to date, data from BloombergNEF showed. It is also one of the country’s biggest agreements.

Demand for the fuel is soaring in Europe, as the continent looks to replace imports of piped gas from Russia. China is the largest buyer of LNG globally, but demand there has been hit in recent months by the government’s policy of strict coronavirus lockdowns.

The gas will come from the North Field East expansion project, which will cost Qatar and investors, including Shell and Exxon Mobil, almost US$30 billion. This is the first supply agreement for the project to boost Qatar’s annual LNG production capacity from 77 million tonnes to 110 million tonnes.

Qatar’s energy minister and head of Qatar Energy, Saad al Kaabi, signed the agreement with Ma Yongsheng, Sinopec’s chairman.

It will “further solidify the excellent bilateral relations” between China and Qatar, and “help meet China’s growing energy needs”, al Kaabi said.

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Qatar is investing about another US$15 billion on its North Field South expansion. That will lift the country’s capacity to 126 million tonnes a year, and is meant to be finished by 2027. BLOOMBERG