China firms in advanced talks with Qatar for gas field stakes

• China’s state-owned energy giants CNPC and Sinopec are in talks with Qatar to buy up to 4 million tonnes per annum of LNG for up to 27 years.
• This would be the single-largest LNG purchase deal between the two countries.
• al oil companies are in advanced talks with Qatar to invest in the North Field East expansion of the world’s largest liquefied natural gas project.
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Three sources familiar with the situation said China’s national oil companies are in advanced talks with Qatar to invest in the North Field East expansion of the world’s largest liquefied natural gas (LNG) project and acquire the fuel under long-term contracts.

As the Middle Eastern energy exporter shifts to increase its Asian client base, it would be the first such agreement between the two countries, who are among the world’s top LNG consumers and producers. The biggest investors in Qatar’s gas sector used to be global energy conglomerates.

The Qatari supply contract will help China construct a buffer against spot price volatility and diversify its imports; relations with two key suppliers, the US and Australia, are at an all-time low, while relations with another, Russia, are on the decline.

According to data from Refinitiv Eikon, Qatar was China’s second-largest LNG supplier behind Australia in the first five months of 2022.

According to three sources familiar with the discussions, state-controlled CNPC and Sinopec are anticipated to each spend 5% in two different export trains as part of the almost $30 billion North Field expansion project.

“Even a modest interest in the project would provide Chinese direct access to the highly globalised enterprise and allow them to gain its management and operational knowledge,” one of the individuals, a top Beijing-based industry figure, said.

Six LNG trains are part of the North Field Expansion, which would increase Qatar’s liquefaction capacity from 77 million tonnes per annum (mtpa) to 126 mtpa by 2027, solidifying Qatar’s position as the world’s largest.

According to the sources, Qatar regards each export train as a separate joint venture, with CNPC and Sinopec each investing in one train.

Sinopec did not respond to a request for comment. A CNPC official stated he didn’t have any information to give.

QatarEnergy did not respond to a request for comment from Reuters.

CNPC and Sinopec are also in talks with QatarEnergy, the state-run energy company, to buy up to 4 million tonnes per annum of LNG for up to 27 years, according to two sources. This would be the single-largest LNG purchase deal between the two countries.

China imported about 9 million tonnes of LNG from Qatar in 2021, accounting for over a quarter of the country’s total LNG imports.

Another of the three sources indicated that discussions are centred on the pricing of long-term supply agreements that will be tied to the global oil market.

TotalEnergies, QatarEnergy’s first project partner, won a 25% ownership in one train, QatarEnergy announced on Sunday. According to QatarEnergy’s chief executive, Asian consumers will account for half of the project’s market, while European buyers will account for the balance. find out more

The project had also received bids from Exxon Mobil, Shell, ConocoPhillips, and Eni.