China’s CNPC Set to Seal Mega Qatari LNG Deal

Petrochemicals refinery

Petrochemicals refinery | Image: Pixabay

The success of this current CNPC and QatarEnergy deal will be even bigger than Sinopec’s

China National Petroleum Corp (CNPC) is in the completion phase of a deal to buy liquified petroleum gas (LNG) from QatarEnergy. This deal has a 30-year period. CNPC would be buying LNG from QatarEnergy, the largest exporter in the Middle Eastern. This gas will be supplied from the North Field expansion project. 

An official from Beijing, related to oil matters, said on the condition of anonymity that CNPC had given green signals to major terms of the deal with Qatar. This deal is going to be very similar to the Sinopec deal last November.

Last November, China‘s Sinopec made a deal with QatarEnergy. The terms included the supply of 4 million tonnes of LNG annually for the longest period of the deal ever signed by Qatar, a surprising 27 years, nearly three decades.

The success of this current CNPC and QatarEnergy deal will be even bigger than Sinopec’s. This will put Beijing, the world’s second-largest purchaser of LNG, to move a step ahead in diversifying its energy requirements towards renewable sources for better sustainability.

Last November, there were positive indications from Sinopec that their agreement was just the tip of the iceberg of partnerships between them. There is news that the firm might purchase a stake in the North Field expansion project of Qatar

Another state-based oil official has hinted that such long-duration deals are not possible. This can only happen when the companies are looking for deeper ties on the economic front. Hence, this hints that Sinopec and CNPC might be taking up a stake in the North Field expansion project in the upcoming months.

Saad al-Kaabi, the Chief Executive Officer of QatarEnergy, has said that they are still the biggest stakeholder with 75 percent under their control, but the North Field expansion project might cost upwards of $30 billion, so they might consider inviting buyers for a sale of a minimal 5 percent stake.

International Relations of China

In recent times, the diplomatic relations of China with Australia and the United States have been dicey. These two countries are Qatar’s competitors in the LNG industry. Chinese energy companies are opting out of Qatar as their safety net to secure the country’s energy requirements as well as forays into the use of cleaner and sustainable energy sources.

The strained relationship is visible through their LNG imports. Imports from Australia and the United States have seen massive falls of 30 percent and 77 percent, respectively. 

China has been rapidly improving its ties with the gulf nation Qatar. On the one hand, where China’s total LNG imports tanked by 20 Percent, the imports of LNG from Qatar have witnessed a surge of 75 percent from 2021. 

CNPC has been benefitting from the European sanctions on Russia. They are importing LNG from Russia through their pipeline networks or tankers. These imports were meant for Europe. But due to European sanctions on Russia, China is profiting by stacking its reserves with discounted LNG imports.

QatarEnergy’s North Field expansion project is a systematic two-phased expansion project. This project aims at increasing Qatar’s liquefaction capacity to 126 million tonnes by 2027 from 77 million tonnes.

QatarEnergy has five signed deals with international players like ExxonMobil, ConocoPhillips, ENI, and Shell. This deal includes an equity investment from a major oil company in the export facility of liquefied natural gas. 

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