Qatar announces second big gas supply deal with China

Qatar on Tuesday (June 20) inked a second 27-year gas supply deal with a Chinese state-controlled firm in less than a year. The move is in line with Qatar's efforts to expand production from the world's biggest natural gas field.

China National Petroleum Corporation (CNPC) and QatarEnergy signed the agreement, under which China will buy 4 million metric tonnes of liquefied natural gas (LNG) a year from the Gulf Arab state.

QatarEnergy chief Saad al-Kaabi said that CNPC will also take an equity stake in the eastern expansion of Qatar's North Field LNG project.

"Qatar will supply four million tonnes annually of natural gas from the North Field East Expansion Project to China over a period of 27 years," Qatar's Energy Minister Saad Sherida al-Kaabi told a signing ceremony in Doha.

"This will become the second LNG (liquefied natural gas) sale and purchase agreement to China within the North Field East Expansion Project," added al-Kaabi, who is also head of state firm QatarEnergy.

CNPC chairman Dai Houliang released a statement saying that the deal will establish a strong foundation for energy cooperation between both sides.

"It lays a solid foundation for the energy cooperation between the two sides in the next three decades," CNPC chairman Dai Houliang said in a statement.

"CNPC will continue to actively discuss with QatarEnergy all-round cooperation across the hydrocarbon industry chain and other areas like green and low carbon energies," he added.

Earlier, QatarEnergy signed a 15-year supply deal with Bangladeshi state company Petrobangla and last month a $10 billion contract was awarded to France's Technip Energies and Consolidated Contractors Company for the engineering, procurement and construction of the North Field South project.

"This type of long-term, large volume deal is exactly what QatarEnergy wants," said Ben Cahill, a senior fellow at the Center for Strategic and International Studies (CSIS).

"QatarEnergy probably has more than 60 million tons (tonnes) per year in uncontracted LNG capacity... So as big as this deal is, Qatar needs to stack up a lot of these."

According to Justin Alexander, director of the Khalij Economics consulting firm: "The solid and long-term demand from Asia may spur European buyers to advance negotiations to ensure the security of supply."

(With inputs from agencies)

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