File Photo: Illustration shows CNPC (China National Petroleum Corporation) logo and stock graph/Reuters
By Reuters
Qatar is set to secure its second large gas supply deal with a Chinese state-controlled company in less than a year, sources familiar with the deal told Reuters on Tuesday.
China National Petroleum Corporation (CNPC) and QatarEnergy are expected to sign a 27-year agreement later on Tuesday, under which China will purchase 4 million metric tons of LNG a year from the Gulf Arab state, two sources briefed on the matter told Reuters.
CNPC also will take an equity stake in the eastern expansion of Qatar’s North Field liquefied natural gas (LNG) project, the sources said. The stake is the equivalent of 5% of one LNG train with the capacity of 8 million tons per year, one of the sources said.
In an identical deal, QatarEnergy sealed a 27-year supply agreement with China’s Sinopec in November for 4 million tons a year. The state-owned Chinese gas giant also took an equity stake equivalent to 5% of one LNG train of 8 million tons a year capacity.
Asia, with an appetite for long-term sales and purchase agreements, has been ahead so far in securing gas from Qatar’s massive production expansion project.
Tuesday’s deal, first reported by the Financial Times, will be QatarEnergy’s third deal to supply LNG from the expansion to an Asian buyer.
Qatar is the world’s top LNG exporter and competition for LNG has ramped up since the start of the Ukraine war, 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 Saad al-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 to 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.
CNPC and QatarEnergy didn’t immediately respond to Reuters requests for comment.