(Photo credit: TotalEnergies)
Qatar and China signed a 27-year deal for purchases of liquefied natural gas (LNG) worth $61 billion, as the world’s second-largest economy looks to bolster its energy security for the next several decades.
“Today is an important milestone for the first sales and purchase agreement for North Field East project, it is 4 million tons for 27 years to Sinopec of China,” QatarEnergy chief Saad al-Kaabi told Reuters in Doha on 21 November.
Kaabi signed the agreement during a virtual meeting with Ma Yongsheng, Sinopec’s chairman. The Qatari official went on to say that the deal will “further solidify the excellent bilateral relations” between Beijing and Doha and “help meet China’s growing energy needs.”
“I think the recent volatility has driven buyers to understand the importance of having long-term supply,” Kaabi added.
Qatar Energy will send Sinopec 4 million tons of LNG per year starting in 2026. The 27-year long deal is China’s longest LNG supply agreement to date, and is also one of the country’s biggest in terms of volume.
The gas deliveries will come from the North Field East (NFE) expansion, an ambitious project that will boost Qatar’s annual LNG production capacity from 77 million tons to 110 million tons in three years.
The NFE is part of the world’s biggest gas field, South Pars, which Qatar shares with Iran. Investors for the $30 billion expansion project include Shell, Exxon Mobil, and TotalEnergies.
Earlier this year, Reuters reported that state-run energy giants China National Petroleum Corp. (CNPC) and Sinopec were in advanced talks to acquire a five percent stake each in two separate export trains from the NFE.
The project gained international significance after the EU lost access to nearly half of its supply of LNG due to sanctions imposed on Russia following the start of the war in Ukraine.
While European leaders looked to the Gulf country to make up for the supplies, officials have made it clear that Doha will not be able to provide Europe with any extra LNG shipments for the next few years.
Qatari officials have also called an upcoming western scheme to set a ceiling for the price of Russian fuel “hypocritical.”
The news comes at a time when the relationships between China and two major suppliers of LNG – the US and Australia – are at a low point.