China sets Asian precedent, buys stock in Qatari mega gas project
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The Qatari Energy Minister calls the agreement a "milestone" and a "landmark" in relations between Doha and Beijing.
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Model of LNG tanker in front of China's flag in this illustration taken May 19, 2022 (Reuters)
China has set another precedent in the natural gas sector after Chinese energy giant Sinopec became the first Asian company to partner with Doha's QatarEnergy (QE) on the expansion of North Field East (NFE) - the world's largest liquified natural gas (LNG) project.
China Petroleum and Chemical Corporation (Sinopec) submitted a request to acquire a share in the Qatari LNG project in November 2022, just after the firm signed a 27-year gas purchase agreement with QE - the longest LNG contract recorded in the Industry.
So far, Western energy companies have the biggest share in the project, making Sinopec's share acquisition a breakthrough.
The North Field is the largest recorded energy well - with estimated reserves of 1,810 Tcf of natural gas and which extends into Iran's maritime territory.
With the $28.75 billion expansion, QE said it expects the annual production to increase from 77 million tonnes a year to 110 million by 2027 - 8 million tonnes of which will go to Sinopec, according to its new five percent share buy-in.
Commenting on the deal, Qatar's Energy Minister described it as a "milestone agreement" and a new "landmark" for relations between Doha and Beijing. Not providing further details on Sinopec's bid value, Minister Saad Sherida Al-Kaabi said it "will not affect the participating interests of any of the other shareholders."
"Today's event underscores QatarEnergy's commitment to deepening its relationships with key LNG consumers, while prioritising long-term strategic partnerships and alignment with world class partners from China, represented by Sinopec here today," Al-Kaabi said in a QatarEnergy statement.
Al-Kaabi and Sinopec chief Ma Yongsheng inked the deal on Wednesday.
On his part, Ma stated that the stake acquisition would "enhance the security, stability, and reliability of clean energy supply. I hope that the two companies will continue to explore new LNG cooperation opportunities based on the solid foundation we have laid together."
The NFE project includes eighty development wells in addition to eight unmanned wellhead platforms.
Western major stakeholders
Earlier in October, Qatari Energy Minister Saad Al-Kaabi announced that Shell will buy a 9.375% stake in North Field South (NFS), another LNG project developed by the country, which will increase Qatar's LNG output capacity by 16 million tons per year.
TotalEnergies SE also joined the project in September, with a 9.375% stake worth approximately $1.5 billion.
American ConcoPhilips energy giant later acquired the final shares offered by QE at 6.25%, while the state-owned energy company will keep 75% of the shares.
