Qatar Signs 27-Year Deal With China as LNG Competition Heats Up

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Qatar Energy has signed a 27-year deal to supply liquefied natural gas (LNG) to China’s Sinopec, the longest LNG agreement ever signed as volatile markets prompt buyers to seek longer-term deals. Huh.

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Following Russia’s invasion of Ukraine in February, competition for LNG has intensified, especially as Europe needs large quantities to help replace Russian pipeline gas that used to make up about 40% of the continent’s imports. .

“Today marks an important milestone for the first sale and purchase agreement (SPA) for the North Field East project, this 4 million tonnes for 27 years for China’s Sinopec,” QatarEnergy chief Saad Al-Kaabi said in Doha I told Reuters, shortly before the deal signing.

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“This indicates that long-term deals are here and are important to both sellers and buyers,” he said, adding that the deal was the LNG sector’s largest single sale and purchase agreement on record.

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

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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 increase Qatar’s liquefaction capacity to 126 barrels per year by 2027. Will increase to million tonnes. 77 million.

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

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

“This takes our relationship to new heights as we have a SPA that will last until 2050,” Kabi said.

long term supply

Kabi said talks are underway with other buyers in China and Europe who want security of supply.

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

“I think the recent volatility has led buyers to understand the importance of long-term supply that is fixed and fairly priced for the long term,” Kabi said.

He said the pricing of the deal would be similar to other previous deals that were linked to crude oil.

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

The agreement was signed on an ex-ship basis, meaning that Qatar Energy will provide the shipping and delivery of the LNG.

Kabi said talks were on with several entities for an equity stake in the Gulf country’s expansion project.

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

Kabi said Qatar Energy would retain an overall 75% stake in the expansion and could sell up to 5% of its stake to some buyers.

“Significant buyers who want to commit substantial amounts over the long term want to see a share of the benefits of the upstream business… So I think this is an important win, if you will, and it solidifies the partnership.” makes.”

Sources told Reuters in June that China’s national oil companies are in advanced talks with Qatar to invest in NFE.

Qatar Signs 27-Year Deal With China as LNG Competition Heats Up

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