One of the top liquefied natural gas (LNG) exporters QatarEnergy has penned a long-term agreement with China Petroleum & Chemical Corporation (Sinopec) for the supply of 4m tons of liquefied gas annually over 27 years.
The deal, estimated to be worth around over $60bn, will see first deliveries start in 2026 and is China’s longest LNG supply agreement to date. In 2021, China was the world’s top LNG importer, but movements fell this year due to Beijing’s unwavering zero-covid policy. Demand is expected to recover as early as 2023 and grow steadily over the next decade.
The gas for Sinopec will come from the North Field East expansion, the first and larger of the two-phase North Field expansion plan to boost Qatar’s LNG production capacity from 77m tons per year to 126m tons per year by 2027. The plan is backed by a massive LNG carrier shipbuilding program in South Korea and China.
Several European states, facing a spike in energy prices and a fuel supply crunch, have also been in talks with the Gulf Arab state to reduce their reliance on Russian energy supplies. Europe’s biggest economy, Germany, has been looking to secure LNG volumes from Qatar but has yet to commit to a long-term deal.