Qatar, China Sign Liquified Natural Gas (LNG) Deal

Policy Brief Program

June 2023

Recent Liquified Natural Gas (LNG) Deal:

• On June 20, China and Qatar signed a 27-year agreement in which state-controlled China National Petroleum Corporation (CNPC) promised to purchase 4 million metric tons of LNG from QatarEnergy. The supply will begin in 2026. 
• In another agreement signed on the same day, CNPC was given an approximately 5% stake in the eastern expansion of Qatar’s North LNG fields. 
  • Qatar’s sovereign wealth fund, which manages over $445 billion in assets, will still collect the majority of revenue from the expansion. 
• Hoping to isolate Russia by reducing its oil and gas revenues, Europe in particular has been seeking out alternative sources of fuel. 
  • Given that Qatar exports the most LNG in the world, it is uniquely positioned to benefit from the shift in Europe’s energy needs. Yet it is China, more so than Europe, that has been strengthening its ties to the region through energy diversification.
• LNG is desirable due to its relatively low greenhouse gas emissions. 
  • Analysts believe that China’s deals with QatarEnergy are a continuation of its efforts to achieve carbon neutrality by 2060.

Previous LNG Collaboration:

• Chinese company Sinopec signed a similar agreement with QatarEnergy in November of 2022. A 27-year deal, QatarEnergy agreed to supply Sinopec with 4 million tons of LNG a year. 
• In April 2023, Sinopec acquired a 1.25% stake in Qatar’s North Field East expansion project, the same that CNPC acquired a stake in. The North Field East expansion will increase Qatar’s LNG production capacity by 32 million tons.  
  • Sinopec was the first “value-added” partner in Qatar’s North field expansion project. 
• In 2021, Qatar began building four new LNG production and export terminals. Experts predict that Qatar’s LNG export capacity will increase to 126 million tons by 2023.

Background on Chinese-Qatari Relations:

• China and Qatar established diplomatic ties in 1988. The two countries have embassies in each other’s capitals. 
• Many believe that these LNG deals deepen China’s foothold in the Gulf.
  • Threatening U.S. influence in the region and edging out Russian oil, China’s closeness with Qatar, experts argue, will assist its long-term economic and political goals in the region.