China's major petrochemical company Sinopec on Monday signed a 27-year contract to buy 4 million tons of liquefied natural gas a year from Qatar's national company QatarEnergy. This agreement clearly shows Beijing's willingness to make every effort to bolster its energy security, despite economic difficulties.
While the European Union has largely turned to the liquefied natural gas market for this winter, China has now secured medium-term deliveries with long-term contracts. The deal is worth roughly $61 billion – or $2.3 billion a year.
Qatar exports most of its LNG to the Asian market, especially to China, Japan and South Korea. In recent years, competition for LNG has become intense, with Europe in particular needing vast amounts to ensure its energy security. However, the reluctance of Germany and other European countries to conclude a long-term contract with Qatar hampers LNG purchase negotiations between the parties.
Historically, the share of term contracts has largely dominated the LNG market. However, the duration of these contracts was less than four years and many more such contracts have been in the form of 'spot' contracts for less than three months.
This marks the longest gas supply agreement in the history of the LNG industry, said Saad Sherida Al Kaabi, Qatar's Energy Minister and head of QatarEnergy. Long-term contracts in the energy sector usually cover periods between 10 and 20 years.
Sinopec Chairman Ma Yongsheng said Qatar is one of the world's largest LNG suppliers, while China is the largest importer of liquefied natural gas.
In 2021, Qatar was the second largest LNG exporter, just behind Australia, but it has the largest natural gas reserves along with the United States.
PhD Candidate at Marmara University's Department of Political Science and International Relations in Istanbul, Turkey