China firms in advanced talks with Qatar for gas field stakes, LNG offtake - sources

Ensign Energy Services

17/06/2022 09:14

By Chen Aizhu
    SINGAPORE, June 17 (Reuters) - China's national oil majors
are in advanced talks with Qatar to invest in the North Field
East expansion of the world's largest liquefied natural gas
(LNG) project and buy the fuel under long-term contracts, three
people with knowledge of the matter said.
    It would be the first such partnership between the two
nations, among the world's top LNG consumers and producers, as
the Middle Eastern energy exporter shifts to expand its Asian
client base at. Global energy corporations used to be the main
investors in Qatar's gas industry. 
    The Qatari supply deal will help China create a buffer
against spot price volatility and diversify its imports; 
relations with two major suppliers, the United States and
Australia, are at a low point, and another, Russia, is in the
midst of a war and faces widespread sanctions. Beijing views gas
a strategic bridge fuel to replace coal on its path to carbon
neutrality by 2060. 
    Qatar was China's largest LNG supplier after Australia in
the first five months of 2022, data on Refinitiv Eikon showed.
    State-controlled CNPC and Sinopec are expected to invest a
5% stake each in two separate export trains, part of the nearly
$30 billion North Field expansion project, the three sources
with knowledge of the discussions told Reuters.
    "The participation, even of a small stake, would give
Chinese direct access to the highly globalized project and learn
its management and operational expertise," said one of the
sources, a senior Beijing-based industry official. 
    The North Field Expansion includes six LNG trains that will
ramp up Qatar's liquefaction capacity from 77 million tonnes per
annum (mtpa) to 126 mtpa by 2027, consolidating its status as
the world's largest producer.
    Qatar treats each export train as one joint venture and CNPC
and Sinopec will invest in one train each, the sources said.
    Sinopec declined to comment. A CNPC representative said he
had no information to share.
    QatarEnergy did not respond to Reuters' request for comment.
    In addition, CNPC and Sinopec are negotiating with state-run
QatarEnergy to buy up to 4 mtpa of LNG each for up to 27 years,
said two of the sources, in what would be the single-largest
purchase deals of the super-chilled fuel between the two
nations. 
    China in 2021 imported nearly 9 million tonnes of LNG from
Qatar, or 11% of the country's total LNG imports.
    Discussions are focused on the pricing of long-term supply
deals that will be linked to the global oil market, another of
the three sources said. 
    QatarEnergy said on Sunday that TotalEnergies had become its
first partner for the project, winning a 25% stake in one train.
Asian buyers are expected to make up half the market for the
project, and buyers in Europe the rest, QatarEnergy's chief
executive said.  urn:newsml:reuters.com:*:nL1N2XZ05Q  
    Exxon Mobil Corp  XOM.N , Shell  SHEL.L , ConocoPhillips
 COP.N  and Eni  ENI.MI  had also submitted bids for the
project.  urn:newsml:reuters.com:*:nL5N2NT2K5
    
    "Chinese participation in the trains are more of a financial
investor as the stake is very small. The key is the price
negotiations for the long-term gas offtakes," the third source
said.
    This person added that Indian companies are also interested
in discussing stakes with Qatar, but did not elaborate. 
    China, the world's top LNG buyer in 2021, imports 45% of its
natural gas needs and sees Qatar as a reliable long-term
supplier after a flurry of purchase agreements with the United
States in late 2021.  urn:newsml:reuters.com:*:nL1N2UO0IU

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
China's share of LNG imports from Qatar jumped to 24.9% in
Jan-May 2022 from 11.7% in Jan-May 2022    https://tmsnrt.rs/3tFPZNk
Key global LNG prices    https://tmsnrt.rs/3OmBENq
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 (Reporting by Chen Aizhu; additional reporting by Marwa Rashad
and Ron Bousso in London and Andrew Mills in Doha; editing by)
 ((aizhu.chen@thomsonreuters.com; Reuters Messaging:
aizhu.chen.reuters.com@reuters.net))