Qatar has secured another major gas supply deal with a Chinese state-controlled company, highlighting the increasing demand for energy in Asia and the rush to secure long-term agreements with one of the world’s leading liquefied natural gas exporters.
China National Petroleum Corporation (CNPC) and QatarEnergy signed a 27-year agreement to purchase 4 million tonnes of LNG annually from Qatar. As part of the deal, CNPC will also acquire a 5% equity stake in one of Qatar’s LNG trains in the North Field, the largest natural gas reservoir in the world.
This agreement comes just months after China’s Sinopec reached a similar 27-year deal with QatarEnergy, which was described as the longest gas supply agreement in LNG history.
QatarEnergy has been attracting attention from governments and energy companies in Europe and Asia, as it continues its $30 billion expansion of the North Field. This expansion will significantly increase Qatar’s domestic LNG production capacity, making it a highly sought-after supplier.
Saad al-Kaabi, Qatar’s energy minister, revealed that the country is also in talks with several European countries, including the UK, France, and Italy, to secure long-term supply agreements before the end of the year.
While there are still some commercial issues to resolve with the UK, QatarEnergy remains optimistic about finalizing deals with European partners. QatarEnergy is the majority owner of the South Hook LNG terminal in Wales and has secured rights for storage and redelivery capacity at the UK’s Grain LNG terminal.
QatarEnergy has emerged as a key player in Europe’s efforts to reduce reliance on Russian gas. While European natural gas prices temporarily returned to normal levels in May, they quickly rose again in June, signaling ongoing concerns over gas supplies despite record-high storage levels.
European governments initially courted Qatar during the energy crisis but have been slower to formalize long-term contracts. Germany is the only European country to have signed a significant agreement with Qatar since Russia’s invasion of Ukraine, highlighting the challenge of balancing short-term energy security with emissions reduction commitments.
Although the majority of Qatar’s LNG is currently shipped to Asia, Saad al-Kaabi hopes to diversify the Gulf state’s markets and evenly distribute LNG shipments between the east and west in the future.
While pleased with the decrease in prices from their highs in 2021, al-Kaabi cautioned that prices could rise again if global economies recover and if there is a normal winter. Despite Europe’s gas storage sites being over 70% full, a potential shortfall remains if economic growth rebounds.
“You don’t have much volume coming in to fill it even further,” he said. “Once you don’t replenish it for one summer, you get hit for two winters.”
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