Qatar LNG Chinese Deal

It would appear that China has nailed down most of Qatar's vast near future output of natural gas from the Qatar North Field. A USD 3 Billion deal was signed this week (1).

“Qatar’s energy minister and the CEO of Qatar petroleum [QP], Saad Sherida Al-Kaabi signed the deal, potentially worth more than 11 billion Qatari riyals ($3 billion) during a virtual ceremony. on Wednesday with Lei Fanpei, the Chairman of CSSC. Hudong-Zhonghua Shipbuilding, a unit of China State Shipbuilding Corporation will construct potentially over sixty 174,000 m³ LNG carriers. QP’s LNG carrier fleet program is the largest of its kind in the history of the LNG industry and will reserve a major portion of Hudong’s LNG ship construction capacity through to 2027. Al-Kaabi said that by entering this deal QP is on “the right track in ensuring that the company’s future fleet requirements will be met in due time to support its increasing LNG production capacity”. QP recently launched a drilling campaign for the North Field East Project as part of plans to expand LNG production. This phase of the North Field expansion project will increase Qatar’s LNG production capacity from 77 to 110 million tons per annum (105 to 150 Bcm). The second phase of the North Field LNG expansion project, called the North Field South Project, will further boost Qatar’s production capacity to 126 million tons per year (171 Bcm).

An overwhelming 83% of the world’s natural gas reserves are located in just 10 countries. Four of those countries – Russia, Iran, Qatar, and Turkmenistan – contain 58% of global reserves.

This deal reinforces the theory that Russia will have brokered, facilitated and encouraged a situation whereby Qatari gas goes east via the Persian Gulf to China and other Far east countries, whilst Iranian natural gas on the other side of the offshore Qatar North Field (known as South Pars on that side of the line), will be transported northwards overland into Turkey and then beyond in the future. This is the optimum scenario for Moscow, which almost certainly plans to achieve a large proportion of European and UK gas import volumes by the middle of this decade (2).

"Even importing gas from beyond Russia’s sphere of influence will be difficult. Importing the equivalent of Nord Stream 2 pipeline would require about 8 to 12 LNG vessel trips per week and competition is fierce. Though Qatar lifted a 2005 moratorium on further LNG development in April 2017, major announcements this year indicate the North Field Expansion (NFE) project will expand production from 105 to 170 Bcm annually by 2024. These developments included new jack-up drilling rigs, four new LNG trains, and a shipbuilding campaign to deliver 60 new LNG carriers and suggest most of the expanded production is destined for Southeast Asia".

1.       Offshore Energy (2020), “Qatar Petroleum Inks Huge China LNG Carrier Deal”, 22^nd April 2020.

www.offshore-energy.biz/qatar-petroleum-inks-huge-china-lng-carrier-deal

2.       Affiliate Network (2019), "Mind The Gap: Geostrategy of Natural Gas", 11th December 2019.

affiliate-network.co/2019/12/strategy-of-natural-gas/