Skip to main content

Qatar and China sign long-term LNG deal worth $60bn

Qatar, the world's largest supplier of liquified natural gas, signs 27-year supply agreement with China
Qatar Energy announces record energy deal with China's Sinopec in a move that is expected to strengthen relations between the two countries (AFP)
Qatar Energy announces record energy deal with China's Sinopec in a move that is expected to strengthen relations between the two countries (AFP)

China has sealed one of the largest ever liquefied natural gas (LNG) deals with Qatar worth a record $60bn, the Qatar News Agency announced on Monday.

The landmark deal with the world's second-largest economy is set to bolster Bejing's energy security for decades and is a significant coup for China as countries rush to lock in energy deals in light of shortages caused by the Russian-Ukraine war

Qatar Energy, the state-owned petroleum company, will send China Petroleum and Chemical Corporation (Sinopec) four million tonnes of LNG a year starting in 2026 in a deal expected to last 27 years. The agreement is also significant because it would be China's longest LNG supply contract and one of the country's largest in terms of volume.

Qatar's energy minister and head of Qatar Energy, Saad al-Kaabi, signed the agreement with Ma Yongsheng, Sinopec's chairman.

Announcing the deal, Kaabi said the LNG supply agreement will "further solidify the excellent bilateral relations" between China and Qatar and "help meet China's growing energy needs".

Stay informed with MEE's newsletters

Sign up to get the latest alerts, insights and analysis, starting with Turkey Unpacked

 

Countries around the world, in particular Europe, have been rushing to secure energy supplies from major producers Qatar and the US, causing prices to rise significantly. 

Ukraine conflict: Could Qatar's gas bail out Europe?
Andreas Krieg
Read More »

Existing sources of pipeline gas and LNG are already maxed out for the foreseeable future, and the deal between Qatar and China is expected to further cement high prices. 

Experts believe that Qatari and American LNG projects will account for seven out of every 10 new LNG shipments by 2030, and few other countries are expected to come close in an industry dominated by these two countries.

Following Russia's invasion of Ukraine, Europe has experienced a major energy crunch, and countries like Germany have been in talks with Qatar to plug the gap. However, negotiations between Doha and Berlin have stalled due to Germany's refusal to commit to long-term contracts. 

Qatar, the world's largest LNG supplier, wants to sign a deal that lasts at least 20 years and includes a standard clause that would prevent Berlin from reselling gas to other parts of Europe. Germany has so far refused such terms. 

In an interview earlier this year, German Economy Minister Robert Habeck accused the US of seeking "astronomical prices" for gas supplies and taking advantage of Europe's energy shortages. 

Qatar revealed plans last year to maintain its pole position in the LNG market by expanding its production capacity by around 60 percent by 2027.

Middle East Eye delivers independent and unrivalled coverage and analysis of the Middle East, North Africa and beyond. To learn more about republishing this content and the associated fees, please fill out this form. More about MEE can be found here.