QatarEnergies, Qatar’s state-owned energy company has signed off on a 27-year Liquefied Natural Gas (LNG) supply purchase and sales deal. The company has partnered with China’s Sinopec, to supply them with 3 million tons of LNG annually. QatarEnergies and Sinopec also aspire to collaborate in other projects in the gulf. This includes the initiation of the second phase of the North Field South Expansion Project. As part of the LNG supply deal, QatarEnergies will transfer a 5% stake to Sinopec. This will be in a joint venture company that owns 6 million tons annually in LNG production. The supply deal marks the third long-term LNG supply deal between the two companies. The two companies signed a 10-year LNG supply agreement in 2021. The companies then signed off on a 27-year contract in 2022.
The LNG supply deal is part of Qatar’s prospect to achieve 40 percent of all LNG supplies by 2029. Qatar’s Minister of State for Energy Affairs said that Qatar’s government is in full support of the role of natural gas as a central component of any energy mix. The Minister added that Qatar is providing the world with the cleanest hydrocarbon source of energy. This will go a long way in providing immense benefits for the companies involved both environmentally and economically. Qatar has recorded a high profit in LNG supply due to the Russian-Ukrainian war that broke out earlier in the year.
Qatar’s LNG Supply Deals Improves Prospects for the North Field South Expansion Project
Qatar is the largest handler of LNG supply deals globally. This means that the country invests much of its resources in the production of LNG and its supply. Qatar’s earnings from its hydrocarbon accounts for more than 50% of the country’s revenue. One of the major investments the country is making in its LNG projects is the North Field Expansion. The project seeks to include six mega LNG trains which will ramp up Qatar’s liquefaction capacity to 126 mtpa. The 126 million tons per annum will account for a 64% increase in production. Qatar has the prospects to further boost its revenue and LNG income once the project takes shape.