Qatar announced a second 27-year supply deal with a Chinese company on Tuesday as it expands production from the world’s biggest natural gas field.
The agreement, to supply four million tonnes annually to the China National Petroleum Corporation (CNPC), matches the terms of a November deal with China’s Sinopec as the longest ever seen in the industry.
Asian countries led by China, Japan and South Korea are the main market for Qatar’s gas, which has been increasingly sought by European countries since Russia’s invasion of Ukraine early last year.
“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.
By expanding activities at North Field, which has the world’s biggest natural gas reserves and extends under the Gulf into Iranian territory, Qatar is raising its LNG production by 60 percent-plus to 126 million tonnes a year by 2027.
CNPC signed a separate agreement for a five percent interest in North Field East, the equivalent of one gas-liquefying complex producing eight million tonnes of LNG a year.
“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.
The value of the deals was not announced.
Qatar, whose gas riches have made its per-capita gross domestic product among the highest in the world, has struck a series of major agreements surrounding the North Field expansion.
– ‘Solid, long-term demand’ –
Earlier this month, QatarEnergy agreed a 15-year supply deal with Bangladeshi state firm Petrobangla, and last month it awarded a $10 billion contract to France’s Technip Energies and Consolidated Contractors Company for the engineering, procurement and construction of the North Field South project.
In April, Sinopec became the first Asian firm to get a stake in the North Field East expansion, also gaining a five percent stake.
“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 security of supply.”
Although much of its gas is sold to Asian countries, in November Qatar announced its first major deal with Germany, selling up to two million tonnes annually for 15 years.
The talks took several months as Germany resisted the long-term contracts that Qatar normally demands to justify its massive investment.
Russia’s invasion of Ukraine increased pressure on the German government to find new sources of supply.
