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Chinese state-owned energy companies are negotiating investments in the expansion of Qatar’s North Field and are ready to close long-term supply contracts, Reuters has reported, citing unnamed sources.
The North Field is the Qatari portion of the world’s largest offshore gas deposit, which it shares with Iran. Iran’s portion is called South Pars.
LNG supply has recently become a top priority for large energy consumers due to tight supply and as the European Union seeks to pivot away from Russian pipeline gas. The supply situation is so tight that in order to supply LNG volumes to Europe, U.S. producers had to divert cargos originally destined for Asian buyers.
Qatar was until recently the world’s largest LNG exporter, but over the last couple of years, it has been dethroned temporarily by Australia, and this year is expected to be overtaken by the United States as additional liquefaction capacity comes online, according to analysts.
If the Chinese state companies finalize their negotiations with Qatar successfully, this would be the first gas partnership between China and Qatar, Reuters noted in its report, adding that until now, the biggest foreign investors in Qatari gas were international energy corporations.
For Qatar, the deal would be part of a planned expansion of its gas presence in Asia, while for China, it would provide much-needed diversification away from its current top supplier, Australia, amid strained bilateral relations.
The North Field East expansion has a price tag of $30 billion, and earlier this month, Reuters reported, again citing unnamed sources, that the Qataris had picked four partners for the project, including Shell, TotalEnergies, Exxon, and ConocoPhillips.
Once completed, in 2027, the expansion will boost Qatar’s LNG export capacity by as much as 64 percent, strengthening the country’s position in the international gas market. All four companies are also currently involved in LNG production in Qatar.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com