QatarEnergy has signed a longest LNG deal to supply China’s Sinopec with liquefied natural gas in the longest such LNG agreement to date as volatility drives buyers to seek long-term supplies.
QatarEnergy has signed a longest LNG deal to supply China’s Sinopec with liquefied natural gas in the longest such LNG agreement to date as volatility drives buyers to seek long-term supplies.
China’s signed a 27-year agreement to purchase 4mn tonnes a year of the fuel from QatarEnergy.
The deal “marks the longest gas supply agreement in the history of the LNG industry”, said Saad Sherida al-Kaabi, QatarEnergy’s chief executive and the Gulf state’s energy minister.
He added that it would “further solidify the excellent bilateral relations between the People’s Republic of China and the State of Qatar and help meet China’s growing energy needs”.
The agreement follows a shorter 10-year LNG purchase arrangement signed in 2021 between QatarEnergy and Guangdong Energy Group Natural Gas Company. Company executives said Monday’s move was likely to be followed by further agreements.
Since Russia’s invasion of Ukraine in February, competition for LNG has become intense, 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.
European companies looking to buy LNG needed to look at how Asian buyers were approaching their own negotiations and were willing to lock into long-term deals, QatarEnergy chief Saad al-Kaabi told Reuters, shortly before signing the Sinopec deal.
“Today is an important milestone for the first sales and purchase agreement (SPA) for North Field East project, it is 4 million tonnes for 27 years to Sinopec of China,” Kaabi said.
“It signifies long-term deals are here and important for both seller and buyer,” he said in an interview in Doha, adding that the deal was the LNG sector’s largest single sales and purchase agreement on record.
The North Field is part of the world’s biggest gas field that Qatar shares with Iran, which calls its share South Pars.
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.
Originally published at Reuters