China and Qatar are on the verge of finalizing a significant LNG supply deal that would span over a period of 27 years, Reuters reported.
The agreement, set to be signed between the China National Petroleum Corporation (CNPC) and QatarEnergy, will enable China to import 4mn metric tons of liquefied natural gas (LNG) annually. As part of the deal, CNPC will also acquire an equity stake in the eastern expansion of Qatar's North Field LNG project. This stake corresponds to approximately 5% of one LNG train, which has a capacity of 8mn tonnes per year.
While QatarEnergy intends to sell equity shares to foreign companies for the North Field expansion, it plans to retain a majority stake of 75% in the project. The expansion project, estimated to cost at least $30bn, encompasses the construction of liquefaction export facilities.
Earlier in April, Sinopec, a Chinese state-owned oil and gas company, entered into an agreement to become a "value-added" partner in Qatar's North Field expansion project.
“The project, with a total investment cost of $28.75bn, aims to raise Qatar’s LNG export capacity from the current 77mn metric tonnes per annum (MTPA) to 110 MTPA, making it one of the largest LNG projects in the world,” Sinopec stated.
Sinopec highlighted the significance of the partnership in terms of optimizing China's energy consumption mix and ensuring a long-term and reliable supply of clean energy for the nation.
China's interest in increasing LNG imports from Qatar, the world's leading LNG supplier, stems in part from its aim to reduce dependence on LNG imports from the United States, the second-largest LNG supplier globally. Some US lawmakers have viewed Chinese reliance on American LNG as an opportunity to wield influence over the world's second-largest economy. However, others, like Senator Bill Cassidy of Louisiana, have emphasized the mutual benefits of Chinese purchases of US-produced LNG, which provide upfront capital to secure shipments and drive demand for more drilling in the United States.
“Right now, China is a frenemy. If they – just like India, South Korea, Japan, the EU – are purchasing or buying, helping to pay for the capitalization of LNG export terminals, well, that’s a good thing,” Senator Bill Cassidy continued.
The impending 27-year LNG supply deal between China and Qatar underscores China's strategic efforts to diversify its LNG sources and reduce its reliance on any single supplier.
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