CNPC inks 27-year deal with Qatar

China National Petroleum Corp's gas deal with QatarEnergy will ensure sufficient gas supply in the country in the long run while facilitating its green energy transition, said industry experts.

The two parties signed a 27-year agreement on Tuesday, one of the longest contract durations in the liquefied natural gas industry, under which China will purchase 4 million metric tons of LNG a year from Qatar. CNPC will also acquire a 1.25 percent share in the expansion of Qatar's North Field East LNG project, CNPC said in a statement on Tuesday.

According to CNPC, the expansion project of the North Field LNG project includes gas field development and the construction of four LNG production lines with a production capacity of 8 million tons per year.

An analyst said that as the competition for LNG has ramped up since the beginning of the Russia-Ukraine conflict, the deal will guarantee China's gas supply and ensure domestic energy supply amid its green transition.

Qatar, the world's top LNG exporter, is putting China ahead to secure gas supplies from its massive production expansion project, as the deal on Tuesday marks QatarEnergy's third deal to supply LNG from the expansion to an Asian buyer, said Li Ziyue, an analyst with BloombergNEF.

Qatar is consolidating ties with Asian buyers, especially Chinese buyers, and half of the project output is expected to meet demand in Asian markets, while the rest goes to Europe, she said.

QatarEnergy earlier this year made China Petrochemical Corp a project partner under similar terms. The two companies reached a 27-year supply agreement in 2022 for 4 million tons per year.

According to QatarEnergy chief Saad al-Kaabi, the deal with CNPC will enhance the company's strong relations with China, one of the most important gas markets in the world and a key market for Qatari energy products.

The North Field East project will come up with an additional LNG production capacity of 32 million tons per year after it is put into operation, increasing Qatar's LNG annual export capacity to 110 million tons by 2025. A second phase, North Field South, will further increase capacity to 126 million tons per year by 2027, according to QatarEnergy.

Dai Houliang, chairman of CNPC, said the company will actively explore comprehensive cooperation with QatarEnergy related to the full industry chain of oil and gas, and green and low-carbon energy, fully leveraging the technologies and experience advantages accumulated in oil and gas field development over the long term.