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China in advanced talks with Qatar for gas stakes worth billions

© Supplied by Qatar EnergyMcDermott QatarEnergy
At the dock: an LNG tanker loads up in Qatar, a major exporter

China’s energy majors are in advanced discussions to invest billions of dollars in Qatar’s massive liquefied natural gas (LNG) expansion project.

State-owned China National Petroleum Corp. and Sinopec are expected to invest in Qatar’s $29 billion North Field East project, said a person familiar with the situation, who asked not to be identified discussing a private matter. The companies are looking to procure LNG under long-term contracts, two other people familiar with the matter said. Reuters earlier reported the news.

Spokespeople for CNPC and Sinopec weren’t immediately available to comment. State-energy producer Qatar Energy didn’t respond to a request for comment.

LNG importers are rushing to secure supply deals as a global shortage is expected to persist for much of the decade amid Europe’s moves to curb Russian pipeline gas. Spot prices for gas in Asia and Europe surged to a record soon after Russia invaded Ukraine, exacerbating a supply crunch for the power plant and heating fuel.

Officials from Qatar Energy came to Singapore earlier this month to meet with Chinese companies, according to two other people. They met with companies including CNPC’s PetroChina and Sinopec, as well as Cnooc Ltd. and Beijing Gas Group Co., regarding long-term LNG deals, the people said. Cnooc and Beijing Gas weren’t immediately available for comment.

China, which overtook Japan as the world’s largest LNG importer in 2021, has been particularly busy signing supply deals with major exporters including the US this last year.

The potential investment by the Chinese firms in Qatar’s expansion follows TotalEnergies SE, which became the first foreign company to win a stake. ExxonMobil and ConocoPhillips are also poised to win stakes, Bloomberg reported earlier this month, while Shell put in a bid.

The North Field East expansion will include the construction of four LNG liquefaction units, or trains. CNPC and Sinopec are expected to invest a 5% stake each in two separate export trains at the plant, Reuters reported.

The North Field expansion projects will increase Qatar’s LNG production capacity from 77 million tonnes per year (t/y) to 126 million t/y.

Last October, Energy Voice reported that China will build four new liquefied natural gas (LNG) carriers for Qatar Petroleum, as part of a deal worth 2.8 billion Qatari Riyals ($760 million) that will help bolster the country’s fleet, as its North Field expansion progresses. Significantly, it was the first order placed with a Chinese shipyard for LNG vessels by Qatar Petroleum and underscored the strengthening strategic relationship between the two nations.

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