Per reporter: Cai Ding Per editor: Cheng Peng, Gao Han
Qatar, not just this year's World Cup.
On November 21, Sinopec (600028.SH) signed a 27-year long-term purchase and sale agreement for liquefied natural gas (LNG) with Qatar Energy, which will supply Sinopec with 4 million tons of LNG per year.
Ma Yongsheng, chairman of Sinopec, publicly stated that the signing of this agreement will not only help meet the demand for natural gas in the Chinese market, but also further optimize China's energy consumption structure and improve the security, stability and reliability of energy supply.
Qatar, as the smallest World Cup host in the history of the World Cup, has invested about 229 billion US dollars for the 2022 World Cup, and behind such "arrogance" is mainly relying on the huge income brought by Qatar's export of oil and gas resources, and the main "financial owner" behind it is Qatar Energy Company. On the other hand, Qatar's natural gas reserves rank third in the world, and its LNG production and export volume have long been among the top in the world. Since the conflict between Russia and Ukraine, many European countries have urgently sought alternative Russian gas supplies, and Qatar, as a major LNG producer and exporter, is accelerating the expansion of production to occupy a larger market.
Sinopec signed a 27-year long-term agreement with Qatar to receive 4 million tons of LNG per year
On November 21, Sinopec announced that Sinopec and Qatar Energy signed a 27-year long-term purchase and sale agreement for liquefied natural gas (LNG).
Qatar Energy will supply 4 million tonnes of LNG annually to Sinopec, and the agreement is an important part of the integration cooperation between the two sides on the expansion of Qatar's northern gas field, and is a milestone.
Sinopec Chairman Ma Yongsheng and Saad Sherida Al-Kaabi, Qatar's Minister of State for Energy Affairs and President and CEO of Qatar Energy, signed the agreement online.
Ma Yongsheng said that China and Qatar have friendly and close relations and natural complementarity in the energy field, which has created a good environment for the two sides to continuously deepen cooperation. The signing of this agreement is in line with Sinopec's purpose and requirements of adhering to green, low-carbon, safe and sustainable development, which will not only help meet the demand for natural gas in the Chinese market, but also further optimize the energy consumption structure of the mainland and improve the security, stability and reliability of energy supply.
It is reported that the North Gas Field Capacity Expansion Project is expected to be put into operation in 2026. The agreement is the second LNG long-term purchase and sale agreement signed between Sinopec and Qatar Energy Company, and the first LNG long-term purchase and sale agreement for the Qatar Northern Gas Field Expansion Project.
On the same day, Qatar National Energy also released the news. Global Network quoted Agence France-Presse as reporting on the 22nd that Qatar Energy said that the company will supply 4 million tons of liquefied natural gas to Sinopec every year from its northern gas field expansion project.
Ma Yongsheng, chairman of Sinopec, and Al Kabi, Qatar's Minister of Energy Affairs and President of Qatar Petroleum, signed the agreement online Pictured from the "Petrochemical V TV" video screenshot Global Network
Qatar's energy minister and Qatar Petroleum president Al-Qaabi said the agreement "marks the longest gas supply agreement in the history of the LNG industry".
On November 18, the LNG carrier "Arruis" from Qatar berthed at berth 1 of the Tianjin LNG Receiving Station of the natural gas branch, receiving and unloading 93,000 tons of liquefied natural gas, which can meet the gas demand of more than 8.7 million households for one month. Source: Sinopec
Al-Kaabi said we are pleased that the two sides have reached this agreement, which will further consolidate the good bilateral relationship between China and Qatar and will help meet China's growing demand for clean energy. Spanning different fields and lasting 27 years, this partnership is extraordinary, exciting and opens a new chapter in our cooperation.
According to the data, China and Qatar have begun people-to-people trade exchanges since the 50s of the 20th century. In recent years, bilateral trade between China and Qatar has grown rapidly, with bilateral trade exceeding US$10 billion in 2013. In 2020, China became Qatar's largest trading partner. In 2021, the bilateral trade volume between China and Qatar reached US$17.17 billion, a year-on-year increase of 57%; In the first half of this year, the bilateral trade volume between China and Qatar reached US$12.83 billion, a year-on-year increase of 71%.
According to Chinese customs statistics, the bilateral trade volume between China and Qatar in 2020 was 10.95 billion US dollars. China's main imports from Qatar are liquefied natural gas, crude oil and petrochemicals.
Image source: Ministry of Commerce of China
A major exporter of liquefied natural gas
Oil and gas revenue soared more than 60% in the first half of the year
As a small Gulf country with a population of only 3 million, its per capita GDP reached $61,276 in 2021. Since Qatar won the bid to host the World Cup in 2010, it has invested at least $200 billion in new infrastructure, most of which comes from Qatari Energy's LNG export revenues.
The oil and gas industry is the backbone of Qatar's economy and the country's "big money" for the World Cup. Qatar is rich in oil and gas resources, with natural gas reserves ranking third in the world, second only to Russia and Iran, and crude oil reserves ranking 14th in the world, with proven reserves of about 25.2 billion barrels, accounting for about 1.5% of the global share. According to the Gulf Times, Qatar's oil and gas revenues account for more than 80 percent of total government revenue, equivalent to about 24 percent of gross domestic product.
The sanctions against Russia triggered by the Russian-Ukrainian conflict by Western countries have led to an energy crisis in Europe. In the first half of the year, the benchmark price of TTF natural gas in the Netherlands, which is regarded as the "bellwether of European natural gas prices", rose to 345 euros/MWh (about 23.7 yuan/cubic meter), a record high.
Concerns about a "cut" of natural gas from Europe have led to a surge in demand for Qatari LNG in overseas markets, which has led to strong growth in Qatari government revenues.
On November 19, local time, Qatar's National Bureau of Statistics released data showing that benefiting from the strong growth of exports of natural gas, oil and related chemical products, Qatar's total exports reached 138.8 billion Qatari riyals (about 272 billion yuan), imports totaled 31.5 billion riyals (about 61.7 billion yuan), and a trade surplus of 107.3 billion riyals (about 210.3 billion yuan), an increase of 85% year-on-year.
While driving the growth of Qatar's government revenue, it also strengthens Qatar Energy's position as one of the world's most important resource companies.
Qatar Energy Corp.'s oil and liquefied natural gas revenues surged by two-thirds to $32 billion (about 230 billion yuan) in the first half of this year, according to Qatar's state media, a huge increase in revenue that also highlights Qatar's ample funds in preparing for the World Cup.
Qatar Energy has built a large "survey portfolio" over the past 10 years, with stakes in projects in Brazil, Canada, the US Gulf of Mexico, Guyana, Suriname, Namibia, Egypt, Angola and South Africa. Qatar Energy is currently aiming to increase its production outside Qatar from 45,000 barrels of oil equivalent per day to 500,000 barrels per day by 2030, including some oil and large amounts of liquefied natural gas.
Qatari Energy Minister and Qatar Energy President Al-Qabi told the Financial Times that Qatar Energy's initial focus is to develop and maximize domestic gas exports, and will then focus on Qatar Energy's overseas expansion.
International energy giants overseas survey Image source: Financial Times
The Financial Times reported that overseas expansion is not common for state-owned oil and gas companies in the Gulf. While Saudi Aramco and Abu Dhabi National Oil have invested in energy projects overseas, they are not pursuing upstream opportunities, instead focusing on maximizing domestic production.
While boosting domestic LNG production in Qatar remains a priority, Kaabi said the newfound crude in Namibia could provide "versatility" and a source of production outside of gas-focused Qatar. "We want to have a mix of oil and gas in our portfolio," he said.
Once on the verge of bankruptcy, with a "big bet" of liquefied natural gas to come back to life
Qatar Energy, founded in 1974, was founded as Qatar Petroleum. In the early 90s, when Qatar Energy was heavily indebted and on the verge of bankruptcy, the company's leaders made a desperate bet to develop and export liquefied natural gas in Qatar's northern oil fields, the world's largest natural gas reserve.
At the time, Gulf governments had traditionally placed less emphasis on natural gas and more on oil resources, and Qatar Energy's heavy bet on LNG at the time was seen as a gamble. In 1992, BP pulled out of Qatar Energy's LNG project on the grounds that it would not yield sufficient returns.
However, five years later, Qatar Energy formed partnerships with giants ExonMobil, Total Energies, Mitsui and Marubeni to build its first LNG export facility. In 2006, Qatar overtook Indonesia to become the world's largest exporter of liquefied natural gas.
For the next 10 years, Qatar Energy suspended further development of the northern oil fields while completing the then existing projects. Meanwhile, Qatar Energy almost never misses the opportunity to ship LNG to its customers.
In 2017, the Qatari government made another big bet and announced huge LNG expansion plans, which also attracted the attention of other energy giants. As part of Qatar Energy's overseas expansion, companies including Shell and Total have invited Qatar Energy to join them in projects in other parts of the world.
Qatar's global LNG share trend Credit: Financial Times
Qatar Energy has now established a global exploration partnership, with Shell, ExxonMobil, ConocoPhillips, Total and Eni all signing new agreements in Qatar's northern oil fields, which will help increase Qatar's domestic LNG production capacity from 77 million tonnes per year to 126 million tonnes by 2027, an increase of about 64% over current capacity.
In addition, from 2025, Qatar Energy will also enter into a partnership with ExxonMobil called Golden Pass to produce an additional 16 million tons of LNG per year.
Today, Qatar Energy is not limited to liquefied natural gas, it is also investing in petrochemical production and solar energy in Qatar, but unlike its publicly listed partners, Qatar Energy has not set net-zero emissions targets for its operations.
Al-Qaabi said there were no plans to list Qatari Energy in the future. He believes that although natural gas emits a large amount of carbon when burned, it is lower than oil and coal, so it should be at the center of the world's energy transition.
Reporter| Cai Ding
Editors| Cheng Peng, Gao Han, Du Bo
Proofreader| He Xiaotao
Cover image source: Screenshot of Sinopec
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