Sinopec has bought a liquefied natural gas project in Qatar with the aim of bolstering the energy security of China, the world’s second largest buyer of the fuel.
At a signing ceremony in Doha, Sinopec, officially known as China Petroleum & Chemical Corp., agreed to take a 5 percent stake in a train with a processing capacity of 8 million tons a year. It is part of the North Field East LNG export project which is under construction and is expected to start shipping gas in 2026.
Cooperation with QatarEnergy will help “optimize China’s energy consumption structure and improve the security, stability and reliability of clean energy supply,” Sinopec Chairman Ma Yongshen said on Wednesday in the event
The investment is the first time China has directly supported an LNG plant in Qatar, one of the world’s top exporters. It is also the latest in a series of deals to lock up gas supplies for decades amid intensifying global competition for the fuel, particularly between Europe and Asia. Japan is currently the world’s largest buyer of LNG.
In November, state-owned Sinopec signed a $60 billion contract to buy 4 million tons of LNG a year. The deal will run for 27 years, making it China’s longest LNG supply deal to date, according to BNEF data.
Long term partners
Ma said on Wednesday that he hopes Sinopec will continue to explore new opportunities for LNG cooperation with QatarEnergy. Qatar is the second largest supplier of fuel to China, after Australia.
Sinopec is better known for its oil refining operations than for its upstream skills, as the company typically leaves drilling activities to its sister company, China National Petroleum Corp. and China National Offshore Oil Corp. Even so, Sinopec owns a 25% stake in Australia. Pacific LNG Export Plant at Curtis Island.
Several European states have sought to secure more LNG from Qatar as Russia’s invasion of Ukraine has disrupted gas flows to the continent for much of the past year. However, their reluctance to sign long-term contracts and agree to fixed destination clauses has hampered negotiations with the Middle Eastern country.
QatarEnergy is “prioritizing China’s long-term strategic partners,” CEO Saad Al-Kaabi said on Wednesday.
ConocoPhillips, Shell Plc, TotalEnergies SE, Exxon Mobil Corp. and Eni SpA are also investors in North Field East, which will increase Qatar’s LNG export capacity to 110 million tonnes per year from 77 million tonnes.
–With assistance from Verity Ratcliffe, Dan Murtaugh and Kathy Chen.
