Qatar aims to solidify its position as a major supplier of liquefied natural gas (LNG) to the key growth market, China, after Qatar Petroleum signed on Monday a ten-year LNG supply deal with Chinese giant Sinopec.
Qatar will supply China Petroleum & Chemical Corporation, or Sinopec, with 2 million tons per annum (mmtpa) of LNG, starting in January 2022.
Qatar has supplied China with more than 62 million tons of LNG since the first LNG delivery in September 2009.
"China is a key and strategic energy partner for the State of Qatar throughout the entire energy value chain. It is also a main driver of the growth in the global LNG market as the government adopts increasingly progressive environmental policies," Qatar Petroleum said.
Last month, Qatar approved what would be the world's largest LNG project in terms of capacity, North Field East Project (NFE), set to raise the tiny Gulf nation's LNG production capacity from 77 million tons per annum (mmtpa) to 110 mmtpa. Apart from hosting the biggest project, which would help it to be the global LNG export leader, Qatar also has one of the lowest breakeven prices for its projects, which is set to contribute to its position of one of the world's top LNG suppliers, analysts say.
"At a long-term breakeven price of just over $4 per million British thermal units, it's right at the bottom of the global LNG cost curve, alongside Arctic Russian projects," Wood Mackenzie research director Giles Farrer said, commenting on Qatar's LNG expansion project.
"Qatar is pursuing market share," Farrer added.
A long-term agreement with China is also a step to securing more of the Chinese LNG market, which is a key driver of global LNG demand growth.
In recent weeks, Qatar has also signed LNG supply agreements with Pakistan and Bangladesh, which, apart from addressing growing demand in southeast Asia, could be interpreted as Qatar growing closer to the China sphere of influence, according to analyst Simon Watkins.
By Charles Kennedy for Oilprice.com
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