China’s Sinopec on Monday concluded a $60 billion long term gas sales and supply agreement with the Middle East’s largest gas factor, Qatar Energy, setting a benchmark for the world’s biggest transactions for largest volumes of supply.
Under the terms of the agreement, China will from 2026 start taking delivery of roughly 4.0 million tons of LNG from Qatar. The deal is for 27 years, making it China’s longest for LNG flows and one of its biggest by volume.
The massive LNG deal comes as the market remains tight, with little extra flows expected to ease price pressures until 2026.
Prices soared earlier this year as Russia’s invasion of Ukraine triggered European sanctions that resulted in Moscow cutting off flows in retaliation. Europe has been scrambling to shore up supplies of the essential heating and power-plant fuel from big exporters like the US and Qatar.
Europe has pivoted toward a greater dependence on LNG in response to the loss of Russian gas. But top European customers haven’t made any real headway with Qatar, though, as countries like Germany remain wary of agreeing to a long-term LNG contract while also planning to phase out fossil fuels.
And while Chinese demand has plummeted this year due to stringent Covid-related lockdowns throughout the country, demand is expected to climb upward once again next year. China was the premier importer of LNG in 2021.
China has also been busy signing LNG deals with top US exporters over this past year as well.