QatarEnergy said Tuesday that China National Petroleum Corp. (CNPC) would become a partner in its massive North Field LNG expansion and purchase the super-chilled fuel from the project for nearly three decades.
CNPC agreed to buy 4 million metric tons/year (mmty) of liquefied natural gas from the North Field East (NFE) expansion for a term of 27 years, one of the longest agreements ever signed in the industry. CNPC is also taking a 5% interest in the equivalent of one NFE train.
The North Field project is the largest ever advanced in the LNG industry. Along with NFE, the North Field South project would add six mega liquefaction trains with a capacity of 8 mmty each. The expansion would boost Qatar’s LNG production capacity from current levels of 77 mmty to 126 mmty by 2027.
The project was sanctioned in 2021 and equity stakes have also been awarded to China Petroleum and Chemical Corp. (Sinopec), ConocoPhillips, Eni SpA, ExxonMobil, Shell plc and TotalEnergies SE.
Only a fraction of the expansion’s capacity has been sold, but Qatar has accelerated contracting since last year. It has also signed sales and purchase agreements with Bangladesh Oil, Gas and Mineral Corp. and Sinopec.
Qatar, which has long taken a hard line during contract negotiations, has reportedly been more flexible in offering shorter terms and better prices for its LNG as competition with the United States has increased.
About 63 mmty of LNG capacity is currently under construction in the United States, which has dominated the long-term contracting market over the last year. Asian buyers, including China, have been particularly aggressive in securing long-term contracts with U.S. LNG producers.
QatarEnergy CEO Saad Sherida Al-Kaabi said last month that the company could sign all the supply deals it needs for the North Field expansion by the end of this year.
CNPC Chairman Dai Houliang said the state-owned company’s partnership with QatarEnergy creates a “strategic synergy” with China’s Belt and Road initiative – a massive infrastructure expansion project aimed at extending China’s global influence – and Qatar’s plans to modernize and further develop the country.
He added that the new partnership would also be a springboard for further discussions about cooperation throughout the “hydrocarbon industry chain and other areas like green and low carbon energies.”
