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China, Qatar enter 27-year gas deal

By JAN YUMUL in Hong Kong | CHINA DAILY | Updated: 2022-11-23 07:53

A long-term energy security deal that would supply liquefied natural gas from Qatar to China for about 27 years has been welcomed by observers and analysts for its farsightedness and alignment with the global green energy push.

On Monday, China Petrochemical Corp, or Sinopec, and Qatar's state petroleum firm QatarEnergy signed the LNG sales and purchase agreement to supply China with 4 million metric tons of LNG per year, through nearly 2050.

Saad Sherida Al-Kaabi, Qatar's minister of state for energy affairs and president and CEO of Qatar-Energy, said the deal marks the longest gas supply agreement ever in the LNG industry.

Sinopec Chairman Ma Yongsheng was quoted by Qatar News Agency as saying that his company "attaches great importance to the cooperation with Qatar-Energy" and the project would meet the needs of the Chinese market and reflects "Sinopec's commitment to a low-carbon, green, safe, responsible and sustainable development path".

Under the terms of the agreement, the LNG will come from QatarEnergy's North Field East LNG expansion project and be delivered to Sinopec's receiving terminals in China, Qatar News Agency reported

Deniz Istikbal, an economic researcher at the Foundation for Political, Economic and Social Research, a think tank in Ankara, Turkiye, told China Daily that in "a period of energy crises", Qatar and China's energy security agreement "points to a long-term relationship and strategy".

He said China has invested in green energy "more than any country in Asia" and that it was "doing the right thing".

Arhama Siddiqa, a research fellow at the Pakistani Institute of Strategic Studies in Islamabad, said China's deal with Qatar "is another example of Chinese planning at its best" and is a "wake-up call" for Europe.

Syed Muhammad Osama Rizvi, an energy and economic analyst at data monitor Primary Vision Network, told China Daily that as Qatar's North Field East project is expected to enhance Qatar's LNG output capacity to 110 million tons from 77 million tons, the country will remain at the center of global energy supplies.

"This giant deal underlines that gas is not dead in a net-zero world despite forecasts by the International Energy Agency. At the same time, it aligns with and supports the scaling up of a greener energy system," said Li-Chen Sim, a professor who specializes in the political economy of Russian and Gulf energy at Khalifa University in the United Arab Emirates.

"This deal will set the pace for deals between Qatar, as well as other LNG suppliers in the Middle East and Africa, and customers in Asia and elsewhere with regard to the pricing of LNG for new projects and the importance of long-term contracts versus spot gas contracts," Sim added.

Siddiqa said it is important to note that "this deal comes amidst the present volatile gas markets, which have resulted in sharp inflation".

China and Qatar's agreement is the second between QatarEnergy and Sinopec, following the 10-year sales and purchase agreement signed for the supply of 2 million tons per year to China in March last year. Japan's largest power generation company, JERA, decided to not renew a 25-year contract with Qatar in November 2021.

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