China’s national oil majors 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 buy the fuel under long-term contracts.
The Qatari supply deal will help China create a buffer against spot price volatility and diversify its imports. Beijing views gas a strategic bridge fuel to replace coal on its path to carbon neutrality by 2060.
Qatar was China’s largest LNG supplier after Australia in the first five months of 2022. Data on Refinitiv Eikon showed.
However, the participation, even of a small stake, would give Chinese direct access to the highly globalized project. And learn its management and operational expertise,” said one source, a senior Beijing-based industry official.
Qatar treats each export train as one joint venture and CNPC and Sinopec will invest in one train each, the sources said.
Currently, CNPC and Sinopec are negotiating with state-run QatarEnergy to buy up to 4 mtpa of LNG each for up to 27 years. In what would be the single-largest purchase deals of the super-chilled fuel between the two nations. China in 2021 imported nearly 9 million tonnes of LNG from Qatar, or 11% of the country’s total LNG imports. QatarEnergy said that TotalEnergies had become its first partner for the project, winning a 25% stake in one train. We expect asian buyers to make up half the market for the project. And buyers in Europe the rest, QatarEnergy’s chief executive said.
Exxon Mobil Corp (XOM.N), Shell (SHEL.L), ConocoPhillips (COP.N) and Eni (ENI.MI) had submitted bids for the project. Chinese participation in the trains are more of a financial investor as the stake is tiny. The key is the price negotiations for the long-term gas offtakes,” the third source said.