Qatar Petroleum inks China LNG supply deal with Shell

Qatar Petroleum said it has entered into a ten-year deal to supply LNG to Shell in China.

Under the SPA, QP would supply 1 million tons per year of LNG to various import terminals in China, it said in a statement on Wednesday.

QP said it would start delivering LNG to Shell from January 2022.

The state-owned company keeps piling up long-term deals as it works on its expansion projects and this marks the fourth deal the firm announced since February this year following the Vitol deal for Bangladesh, the Pakistan agreement, but also the Sinopec deal.

“I am especially delighted that this agreement will meet part of the demand of Shell’s end customers in China, thereby further supplementing Qatar’s contribution to meeting China’s growing energy needs,” Qatar’s energy minister and chief executive of QP, Saad Sherida Al-Kaabi, said.

QP plans to supply these contracted LNG volumes from its Qatargas 1 joint venture that operates the first three LNG trains in Ras Laffan. QP said earlier this year it would become the sole owner of the JV from 2022.

Moreover, the firm says China is a major customer for Qatar and a strategic partner in the energy sector.

With the conclusion of this agreement, Qatar would supply China with some 12 mtpa of LNG under long-term SPAs, QP said.

Giant LNG expansion plans

The new LNG supply contract comes months after QP announced a final investment decision on its $28.75 billion North Field East project.

Under the project, QP will build four mega trains with a capacity of 8 million tonnes per year in the Ras Laffan complex.

This first phase of the expansion project will increase Qatar’s LNG production capacity from 77 to 110 mtpa.

QP also plans a second phase to further boost capacity to total 126 mtpa by 2027 as well as additional expansions.

The company’s unit Qatargas already operates in total fourteen LNG trains at Ras Laffan.

In addition, QP’s Al-Kaabi recently said that Shell, TotalEnergies, and ExxonMobil were bidding to take a stake in the company’s giant LNG expansion project.

He said QP had received offers for double the equity available to potential partners in the bidding process for the North Field East project.

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