QatarEnergy and CNPC to strike mega long-term LNG supply deal

QatarEnergy is expected to sign a long-term supply deal for liquefied natural gas with state-owned China National Petroleum Corporation (CNPC), according to reports.

The agreement will involve the supply of 4 million tonnes per annum (tpa) of LNG over a 27-year period to CNPC, Reuters and the UK’s Financial Times have reported.

CNPC will also take a 5% stake in one of the LNG trains of QatarEnergy’s North Field LNG expansion, the reports said.

If confirmed, this would be the third long-term deal between QatarEnergy and a state-controlled Chinese buyer after a long-term agreement was signed with China Petroleum & Chemical Corporation (Sinopec) last year.

Previous supply agreements

QatarEnergy earlier “entered into a 27-year sales and purchase agreement with Sinopec for the supply of 4 million tpa of LNG to the People’s Republic of China,” it previously said in a statement.

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“Under the terms of the SPA [sale and purchase agreement] , the contracted LNG volumes will be supplied from QatarEnergy’s North Field East [NFE] LNG epansion project and will be delivered to Sinopec’s receiving terminals in China.”

In 2021, an offtake agreement was signed between QatarEnergy and Sinopec, following a 10-year SPA signed for the supply of 2 million tpa to China.

Sinopec was also selected by QatarEnergy earlier this year to participate in the NFE liquefied natural gas expansion project.

The agreement between the two companies will see QatarEnergy transfer to Sinopec a 5% interest in the equivalent of one NFE train with a capacity of 8 million tonnes per annum of LNG.

North Field Expansion

The mega LNG supply deals follow the conclusion of the formation of multiple international partnership agreements for the North Field East and North Field South [NFS] projects.

Qatar is greatly expanding the capacity of its North Field and aims to achieve an LNG production capacity of 110 million tpa by 2027, significantly higher than the current 77 million tpa nameplate capacity.

The expansion, being carried out through two phases, is expected to cost Qatar up to $50 billion, Upstream understands.

New LNG deals

QatarEnergy chief executive Saad Sherida al-Kaabi told the Financial Times that he expects to sign long-term supply agreements with “several European countries” before the end of the year.

Al-Kaabi noted QatarEnergy was close to sealing deals with the UK, France and Italy.

“We have been, and continuously are, in discussions with different companies to supply gas into the UK and we expect that before the end of the year, we could probably have a deal done,” said al-Kaabi, who is also Qatar’s energy minister. “We are going to have several European deals before the end of the year — for sure, 100 per cent.”