In a significant move to bolster their energy cooperation, Qatar and China have inked a second long-term gas supply agreement. The deal, announced on Tuesday, marks Qatar's expansion in production from the largest natural gas field globally.
Under this new agreement, Qatar will supply the China National Petroleum Corporation (CNPC) with four million tons of natural gas annually over a span of 27 years. This matches the terms of a previous deal signed with China's Sinopec, which is renowned as the longest-ever seen in the industry.
Qatar's gas, predominantly sought by Asian countries led by China, Japan, and South Korea, has witnessed increased demand from European nations following Russia's invasion of Ukraine last year.
The signing ceremony, held in Doha, was attended by high-level officials. Saad Sherida Al-Kaabi, Qatar's Minister of State for Energy Affairs and President and CEO of Qatar Petroleum, expressed his enthusiasm, stating, "Qatar will supply four million tons annually of natural gas from the North Field East Expansion Project to China over a period of 27 years." He further added, "This will become the second LNG (liquefied natural gas) sale and purchase agreement to China within the North Field East Expansion Project."
Qatar's ambitious plans include expanding activities at the North Field, which possesses the world's largest natural gas reserves and extends into Iranian territory beneath the Gulf. The country aims to raise its LNG production by over 60 percent, reaching 126 million tons per year by 2027.
In addition to the gas supply agreement, CNPC also signed a separate deal, acquiring a five percent interest in North Field East. This stake is equivalent to one gas-liquefying complex capable of producing eight million tons of LNG annually. CNPC Chairman Dai Houliang hailed the agreement as a solid foundation for energy cooperation in the coming three decades. He expressed CNPC's commitment to exploring comprehensive collaboration with QatarEnergy across the hydrocarbon industry chain, as well as in areas like green and low-carbon energies.
While the financial details of the agreements were not disclosed, Qatar, with its abundant gas reserves, has been actively engaged in striking major deals related to the North Field expansion. Just earlier this month, QatarEnergy secured a 15-year supply agreement with Petrobangla, a state-owned company in Bangladesh. Moreover, in the previous month, France's Technip Energies and Consolidated Contractors Company were awarded a $10 billion contract for the engineering, procurement, and construction of the North Field South project.
This recent deal further solidifies Qatar's position as a leading global gas supplier. It is worth noting that Sinopec, an Asian firm, became the first to acquire a stake in the North Field East expansion in April, also securing a five percent stake.
Despite the majority of Qatar's gas being sold to Asian countries, the nation diversifies its market by establishing agreements with other regions. In November, Qatar announced its first major deal with Germany, which entailed selling up to two million tons of gas annually for 15 years. The negotiations for this particular deal were protracted, as Germany initially resisted the long-term contracts typically demanded by Qatar to justify its significant investments.
With Russia's invasion of Ukraine intensifying pressure on the German government to seek alternative supply sources, Qatar's gas exports play a crucial role in meeting the growing global energy demand.
This new long-term gas supply agreement between Qatar and China not only reinforces their bilateral ties but also signifies Qatar's unwavering commitment to global energy security. As the world continues to transition towards sustainable energy sources, Qatar's vast gas reserves assume a pivotal role in meeting the evolving energy needs of nations worldwide.
