Qatar Petroleum is set to supply another 1 million tonnes per year (t/y) of liquefied natural gas (LNG) to China after signing a 10-year contract with Shell. The deal brings Qatari LNG supplies to China under long-term deals to 12 million t/y.
Under the latest deal with Shell, LNG deliveries will start in January 2022 to various LNG terminals in China, Qatar Petroleum said yesterday. China is set to become the world’s largest LNG importer this year.
The deal should come as no surprise. China’s LNG demand continues to expand and suppliers in Qatar, Russia, and Africa, look set to benefit as China seeks to diversify its import mix that has become more reliant on Australian LNG in recent years.
Qatar said China is considered a major customer and strategic partner in the energy sector. Those ties look set to get stronger. In April, CNOOC, China’s third-biggest oil company, signalled its interest to become a partner in Qatar’s $29 billion North Field LNG expansion project, that will be the world’s largest.
Under the deal with Shell, the deliveries will come from the Qatargas 1 project. Qatar Petroleum operates the 10 million t/y joint venture project with TotalEnergies, ExxonMobil, as well as Japanese companies Marubeni and Mitsui. However, Qatar Petroleum will be 100% owner of Qatargas 1 at the start of next year, when its joint venture agreement with its partners expires.
Top LNG importer
Surging demand will see China become the world’s largest importer of LNG this year, stealing the crown from Japan, according to forecasts from energy research company Wood Mackenzie.
After a lackluster 2020, Asian LNG demand firmly returned to growth in the first five months of 2021, with China the single biggest contributor. Wood Mackenzie now expects 11 million tonnes of demand growth from China this year, meaning the nation will account for over half of the 18 million tonnes increase in global LNG demand forecast for 2021. With its LNG demand bolstered by clear policy support and strong gas market fundamentals, China’s top spot looks assured for years to come, predicts the research company.