Editorial Analysis by Manuel Chen-Cruz
China National Petroleum Corp (CNPC) is in the final stages of a deal to purchase liquefied natural gas (LNG) from QatarEnergy for nearly 30 years. The agreement is part of China’s efforts to diversify its gas sources and reduce its carbon emissions by replacing coal. The deal follows a similar agreement between China’s Sinopec and QatarEnergy, announced in November, in which the Middle Eastern exporter agreed to supply 4 million tonnes of LNG annually for 27 years, the longest duration LNG supply contract in Qatar’s history.
CNPC, China’s top gas importer, dominates the country’s piped gas imports, but still needs to diversify its supply to mitigate any potential risk. The deal with QatarEnergy will help CNPC secure additional long-term supply from a reliable partner, further insulating the company from market volatility and diversifying its supply. The agreement is expected to strengthen CNPC’s competitiveness, as it continues to align with China’s energy policy of supply diversification.
The strained ties between the United States and Australia, Qatar’s two largest LNG export rivals, have led Chinese national energy firms to increasingly view Qatar as a safer target for resource investment. The long-duration supply contracts between CNPC and QatarEnergy could also indicate the possibility of CNPC acquiring a stake in Qatar’s North Field expansion export facility.
Last year, QatarEnergy signed five deals with international majors for the North Field project, a two-phase expansion plan to boost Qatar’s liquefaction capacity to 126 million tonnes per year by 2027. The five majors – TotalEnergies, ExxonMobil, ConocoPhillips, ENI, and Shell – signed joint-venture agreements with QatarEnergy that included equity investments in the liquefaction export facilities.
Finally, the upcoming deal between CNPC and QatarEnergy is a positive move for both companies and will play a crucial role in China’s efforts to diversify its gas supply sources and reduce its carbon footprint.
The opinions expressed in this publication are those of the author.
They do not purport to reflect the opinions or views of the AMeAR|News, R2iNTEL or its members.