Qatar has signed an agreement to supply China’s Sinopec with natural gas for 27 years, the longest deal of its kind, QatarEnergy chief Saad al-Kaabi Kaabi told Reuters Monday.
The $60 billion deal will provide 4 million tons of liquefied natural gas (LNG) per year to China as overall global demand for LNG from non-Russian sources has soared, with Qatar, the world’s largest LNG exporter, set to reap the rewards, Reuters reported. China has imported record amounts of LNG from Russia over previous months after Russian prices tanked as a result of the West’s punishing sanctions regime, amid fierce competition for energy resources.
“Today is an important milestone for the first sales and purchase agreement for North Field East project, it is 4 million tonnes for 27 years to Sinopec of China,” Kaabi told Reuters. “It signifies long-term deals are here and important for both seller and buyer.”
Qatar’s North Field comprises part of the world’s largest natural gas field, which it shares with Iran, according to Reuters. QatarEnergy signed two deals earlier in 2022 expanding its reach into the North Field.
“We are very happy about this deal with Sinopec because we have had a long-term relationship in the past, and this takes our relationship to new heights as we have an SPA that will last into the 2050s,” Kaabi told Reuters.
Kaabi added that QatarEnergy is in discussions with other European and Chinese buyers for future deals, as the world looks to increase energy security amid volatile markets.
Sanctions against main LNG exporter Russia, a bid by Western countries to impose consequences for its war in Ukraine, have disrupted global LNG availability and sparked efforts by European countries to seek alternative suppliers.
“I think the recent volatility has driven buyers to understand the importance of having long-term supply,” Kaabi told Reuters.
Kaabi projected Qatar as a significant energy source for Europe over the next several decades in October and is planning to open new production facilities by 2026 to support increased demand, Axios reported.
Qatar may not be able to alleviate Europe’s energy crunch in the short term, Kaabi told Gulf Times, but said “new Qatari LNG exports to Europe should be significant.”
“I think 10 to 15 year deals are probably what are most acceptable to both sides. But for us, the long-term deal, it’s not just about duration, it’s about price,” Kaabi said, according to Gulf Times.
The deal comes as Qatar is hosting the World Cup soccer tournament. The small desert country has risen to prominence since it began exploiting natural gas reserves off its coast, while government officials have tied the World Cup to the country’s overall growth, according to The Wall Street Journal.
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