Chinese state-owned company Sinopec (600028.SS) and QatarEnergy have entered into a new 27-year liquefied natural gas (LNG) supply and purchase agreement, as announced by both firms on Saturday.
This significant deal was unveiled during the China International Import Expo in Shanghai and marks the third long-term supply agreement between these industry giants.
The primary focus of this latest agreement centers on the second phase of Qatar’s North Field expansion project.
Under the terms of the deal, QatarEnergy will supply Sinopec with a substantial 3 million metric tons of LNG annually.
This collaboration is poised to significantly boost both companies’ positions in the global LNG market.
Furthermore, a strategic partnership agreement was also signed, outlining the transfer of a 5% interest from QatarEnergy to Sinopec.
This transfer pertains to a joint venture company that holds the rights to an impressive 6 million tons per year of LNG production capacity in the North Field South project.
This partnership reinforces the commitment of both organizations to capitalize on the growing demand for LNG and secure their positions as key players in the global energy landscape.
It is worth noting that QatarEnergy stands as the world’s leading LNG supplier, making this partnership particularly strategic for Sinopec.
Their collaboration started in 2021 with a 10-year LNG purchase and sales agreement and was followed by a 27-year deal in the subsequent year.
The North Field, which Qatar shares with Iran (known as South Pars on the Iranian side), is part of the world’s largest gas field. Qatar’s ambitious expansion plan for the North Field involves the establishment of six LNG trains.
By 2027, this expansion aims to elevate Qatar’s liquefaction capacity from 77 million metric tons per year to a staggering 126 million metric tons per year, making it a dominant player in the LNG market.
This latest agreement between Sinopec and QatarEnergy underscores their shared commitment to meet the rising global demand for LNG and further solidifies their positions as key contributors to the world’s energy supply.