QatarEnergy has signed one of the longest liquefied natural gas (LNG) agreements when it reached a deal with China’s Sinopec to supply 4 million tonnes per year (tpy) for the next 27 years.
QatarEnergy will supply the volumes from its North Field East (NFE) project to Sinopec’s terminals in China. The Qatari company will start production at NFE in 2026 and will supply to Sinopec until 2053. The NFE is part of the world’s biggest gas field that Qatar shares with Iran.
“This is the first long-term Sale and Purchase Agreement (SPA) from the NFE project to be announced and marks the longest gas supply agreement in the history of the LNG industry,” said Saad Sherida Al-Kaabi, Minister of State for Energy, and also the president and CEO of QatarEnergy.
“In addition, it opens a new and exciting chapter in our relationship with Sinopec, one that is very special and spans a number of different areas, and which we are excited about further growing and expanding into the 2050s.”
Al-Kaabi added: “It signifies long-term deals are here and important for both seller and buyer.”
The deal was signed on an ex-ship basis, meaning QatarEnergy will also provide shipping and delivery.
Sinopec chairman Ma Yongsheng added: “Qatar is the world’s largest LNG supplier, and China is the world’s largest LNG importer. The two countries share inherent complementarities and a good foundation for energy cooperation. QatarEnergy is a strategic, long-term and all-round partner, and we are expecting more cooperation fruits to come.
“Sinopec has been always committed to the development of green and clean energy through low-carbon, green, safe, responsible and sustainable development.”
In March 2021, Sinopec already signed an agreement to take 2mn tpy of LNG for 10 years. The NFE deal is the second agreement between the companies.
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 ramp up Qatar’s liquefaction capacity to 126 million tonnes per year by 2027 from 77 million.
As countries, especially European, look for alternatives to Russia, Qatar is being targeted by most of them. Al-Kaabi said negotiations with other buyers in China and Europe that want to have security of supply were ongoing.
“I think the recent volatility has driven buyers to understand the importance of having long-term supply that is fixed and that’s reasonably priced for the long term,” Al-Kaabi told Reuters.
“The way we’re pricing our deals with Asia is crude linked. We’ve done it this way in the past and that’s the mechanism we’re using going forward.”
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