Sinopec, the Chinese state-owned oil and gas company, said on its official social media account that it had signed a shareholder agreement with QatarEnergy in Doha on April 12 to purchase a 1.25% stake in the North Field East expansion project, as reported by S&P Global.
LNG expansion project
China’s Sinopec has acquired a 1.25% stake in Qatar’s North Field East LNG expansion project, which will add 32 million mt/year of capacity. The stake comes from a 5% interest in one of the LNG trains with a capacity of 8 million mt/year. Sinopec signed a 27-year sales and purchase contract with QatarEnergy for 4 million mt/year of LNG from the project in November 2022. Other stakeholders in the project include ExxonMobil, TotalEnergies, ConocoPhillips, ENI, and Shell. The project aims to increase Qatar’s LNG export capacity to 110 million mt/year by 2026.
China’s Sinopec has signed a 27-year LNG deal with QatarEnergy for the supply of 4 million mt/year of LNG from the North Field East expansion project. As part of the deal, Sinopec has acquired a 1.25% stake in the overall North Field East expansion project. The agreement was signed at an oil-linked Brent slope of 12.7-12.8%. Qatar plans to prioritize developing a long-term business with large customers like Sinopec. The deal is notable as Qatar’s share in Japan’s LNG imports has been declining, leaving China as the main Asian market for new LNG supply.
Increasing demand for alternative gas
Qatar’s customer base for LNG saw a reshuffle in 2022, with China becoming the largest buyer and Japan falling behind significantly. QatarEnergy signed a 10-year LNG agreement with Sinopec in 2021. The North Field, the world’s largest non-associated gas field, is being expanded to meet the increasing demand for alternative gas supplies after Russia’s invasion of Ukraine. The European benchmark TTF month-ahead price reached an all-time high in August 2021 but has since weakened due to healthy storage levels and demand curtailments.
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Source: S&P Global