Liquefied natural gas: Qatar supplies LNG to China

Status: 11/21/2022 3:39 p.m

The Chinese state-owned company Sinopec has secured long-term access to fossil energy sources. The People’s Republic concludes a billion-dollar gas supply contract with Qatar over 27 years.

The Gulf Emirate of Qatar has signed a long-term gas supply contract with China. The state-owned company Qatar Energy will deliver four million tons of liquefied natural gas (LNG) to the People’s Republic every year, the group announced today.

The contract runs for 27 years, making it the longest-running contract in the history of the LNG industry, according to Energy Minister and Qatar Energy boss Saad Sherida Al-Kaabi. According to the news agency Bloomberg the deal is worth more than $60 billion.

The gas will come from the eastern part of the North Field natural gas field off the coast of the country and will go to the Chinese company Sinopec. Sinopec said it would also take a stake in the southern North Field. The Western energy companies Shell, TotalEnergies and ConocoPhillips have so far held a 25 percent share. North Field is part of the South Pars Field, which is believed to be the largest natural gas field in the world. It is jointly claimed by Qatar with Iran.

LNG as a temporary solution

Qatar is one of the world’s largest exporters of LNG and aims to increase production by 60 percent by 2027. Then the country wants to produce 126 million tons annually. The main customers are China, Japan and South Korea.

Since the start of the Russian war against Ukraine, Germany and other European countries have also been increasingly asking for LNG. Europe is currently urgently looking for alternatives to Russian gas supplies. Before the war, Russian gas accounted for around 40 percent of European imports.

Kaabi said that negotiations are currently ongoing with other possible buyers from China and Europe. However, European countries do not want to conclude such long-term contracts as China, because LNG is only intended to serve as a transitional energy source.

Originally, Germany also had hopes for short-term LNG deliveries from Qatar. Federal Economics Minister Robert Habeck therefore traveled to the Gulf region in March and met with Qatar’s Energy Minister. In a declaration of intent, both sides envisaged a deeper energy cooperation. So far, however, there have been no supply contracts with German energy companies.

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