Qatar And China Make History With 27-Year LNG Supply Deal

By Tsvetana Paraskova of OilPrice.com

Qatar’s state firm QatarEnergy signed on Monday the longest-term contract in the history of the LNG industry in a deal to supply LNG to Chinese state energy giant Sinopec for 27 years.

QatarEnergy will supply China Petroleum & Chemical Corporation (Sinopec) with 4 million tons per annum (MTPA) of LNG to China from the North Filed East (NFE) expansion project, just as global competition for LNG intensifies amid a European rush to secure non-Russian gas supply.

“This is the first long-term SPA from the NFE project to be announced, and marks the longest gas supply agreement in the history of the LNG industry,” said Saad Sherida Al-Kaabi, Qatar’s Minister of State for Energy Affairs and President and CEO of QatarEnergy.  

Qatar has traditionally preferred long-term supply deals with customers, at which Europe balked earlier this year. But more recently, even European companies have started negotiations for longer-term supply with LNG providers. 

China, for its part, is looking to secure LNG to avoid more spot buying amid uncertainties over the Asian spot prices in the coming years. 

Today’s sale and purchase agreement (SPA) also represents the first long-term LNG offtake agreement from the NFE Expansion project. Qatar’s North Field East and North Field South (NFS) projects are expected to come online in 2026 and 2027, respectively.

Qatar announced last year the world’s largest LNG project, which is set to raise its LNG production capacity from 77 million tons per annum (mmtpa) to 110 mmtpa. The Gulf gas and oil producer also plans another expansion phase at the North Field, the world’s largest natural gas field, which it shares with Iran. The second expansion phase will be the North Field South Project (NFS), set to further increase Qatar’s LNG production capacity from 110 mmtpa to 126 mmtpa, with an expected production start date in 2027.