Qatar Signs Further Deal with PetroChina
Qatargas has secured a long-term LNG sales contract with state-owned PetroChina to supply 3.4mn metric tons annually out to 2040.
The move is a positive development for Qatargas which has a number of major contracts with east Asian offtakers that are due to expire in the next few years, not least because PetroChina's parent company Chinese firm CNPC signed contracts with US supplier Cheniere. Then last month Beijing threatened tariffs on US LNG imports in response to the US imposing tariffs on Chinese export products.
The Qatari firm said September 10 it signed the sale and purchase agreement (SPA) agreement with PetroChina International Company, a unit of PetroChina. Under the 22-year agreement ending 2040, Qatargas will supply LNG from Qatargas 2, a joint venture between Qatar Petroleum, ExxonMobil and Total, to different receiving terminals across China, with the first cargo to be delivered later this month.
“We are very pleased to be of support to the People's Republic of China in its quest to secure LNG supplies to meet the country's growing energy requirements. As we announce this long-term SPA, we look forward to continuing to supply reliable and clean energy to China and to countries all over the world that seek to use the cleanest fossil fuel available to meet their energy needs,” Qatargas chairman Saad Sherida Al-Kaabi said.
Khalid Bin Khalifa Al-Thani, Qatargas CEO said: “With China expected to become one of the world's largest gas markets, this SPA will further strengthen the existing relationship between Qatargas and PetroChina over the long-term." Qatargas-4 has an existing SPA with PetroChina to deliver 3mn mt/yr delivered ex ship, which started in 2011 and runs until 2036.
The new SPA allows flexibility in delivering LNG to various receiving terminals across China, including the Dalian, Jiangsu, Tangshan and Shenzhen LNG receiving terminals, utilising Qatargas' fleet of 70 conventional, Q-Flex and Q-Max LNG vessels, Qatargas said.
With US-China trade war leading to Beijing imposing tariff on LNG, China is looking to source LNG from other sources such as Qatar. China’s LNG imports have been rapidly rising due to government’s coal to gas switching policy. Asia’s biggest economy became world’s second largest LNG importer last year, overtaking South Korea.
In addition to its two long-term Qatari contracts, PetroChina has LNG SPAs with suppliers ExxonMobil (2.25mn mt/yr, 2016-36, sourced from Australia), Shell (2mn mt/yr, also 2016-36), plus the Cheniere contracts to supply CNPC with 1.2mn mt/yr out to 2043 - the latter with a phased start-up between now and 2023.