State-owned Qatar Petroleum (QP) on Monday signed an agreement to supply China Petroleum & Chemical Corp., aka Sinopec, with 2 million tons (Mt) of liquefied natural gas (LNG) annually for a term of 10 years.
The deal is yet another bold move for QP as it looks to strengthen its hand in the future of the global gas market. While Qatar began supplying customers in China with LNG in 2009, the sale and purchase agreement (SPA) announced Monday is its first long-term deal with Sinopec, a major Chinese LNG importer.
Under the agreement, deliveries will begin in January 2022 and be shipped to Sinopec’s LNG terminals in China. The country is the world’s second largest LNG importer, accounting for 17.4% of global market share in 2019, according to the International Group of Liquefied Natural Gas Importers.
China is also expected to drive a significant portion of future growth in the LNG export trade as President Xi Jinping has already announced plans for an “energy revolution” and targets for a carbon-neutral economy by 2060.
“Sinopec has been a strong advocate for cleaner and greener development,” said Sinopec Chairman Zhang Yuzhuo. “The signing of the long term LNG SPA with Qatar Petroleum is a further step by Sinopec to deliver its commitment to sustainability while meeting the growing needs of the Chinese market.”
About two-thirds of Qatar’s LNG exports are delivered throughout Asia. The company has shipped 62 Mt to China alone since its exports to the country started in 2009. QP’s deal with Sinopec comes amid a broader push to solidify its dominance in the export market after having signed other recent supply agreements and securing the bulk of the world’s LNG shipbuilding capacity to serve its $30 billion North Field East expansion project, the largest LNG development ever sanctioned.
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