QatarEnergy has inked a long-term LNG supply agreement with state-owned Kuwait Petroleum Corp. (KPC) as the nearby Middle Eastern oil producer looks to ease mounting natural gas supply and power demand issues.
Starting at the beginning of next year, QatarEnergy agreed to deliver up to 3 million metric tons/year (mmty) of liquefied natural gas to Kuwait for 15 years. Cargoes are to be delivered on an ex-ship basis by Qatar Energy to Kuwait's Al-Zour LNG terminal onboard Qatar’s growing fleet of Q-Flex and Q-Max vessels.
CEO Saad Sherida Al-Kaabi said the agreement will extend Qatar’s partnership with Kuwait while bolstering the fellow Gulf State’s power sector.
“It also reflects our commitment to support the future needs of all our clients, foremost of which is KPC,” Al-Kaabi said.
Qatar is Kuwait’s largest LNG supplier, delivering more than half of the country’s 6.22 mmt in imports last year. KPC previously inked a 3 mmty, 14-year sales and purchase agreement with QatarEnergy in 2020 and began receiving cargoes in 2022.
It also has a collective 4 mmty in supply under contract from Shell plc and a 1.5 mmty sales and purchase agreement (SPA) with Mitsui & Co. Ltd. that expires next year.
QatarEnergy didn’t disclose whether the SPA was connected to specific trains or developing export projects, but the agreement adds to its growing list of contracts and equity deals as it shores up buyers for its increased output.
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QatarEnergy has targeted growing LNG production capacity from 76.8 mmty to 142 mmty by the end of the decade. Earlier this year, it disclosed a third expansion plan called North Field West that would follow the 32 mmty North Field East expansion in 2026-2027 and the 16 mmty North Field South expansion in 2027-2028.
Kuwait has been seeking more long-term supply and spot cargoes this year as rising power demand and searing temperatures have threatened its grid stability. The country’s energy ministry extended systematic outages that have been ongoing since June.
LNG imports reached 1.1 mmt in July, the highest point since last August. While KPC has been working to secure more spot volumes later this year with tenders for three cargoes in October and one cargo in November, according to data from Kpler, its year/year import volumes are still roughly 1 mmty behind the same period in 2023.
The specter of increased competition with European buyers and similarly scorching summer heat in other parts of Asia have kept spot prices elevated and near or above the $14/MMBtu mark for most of August.
