Clarifies the size of Sinopec's stake

State-owned QatarEnergy (QE) has agreed to transfer a small stake in its 32mn t/yr North Field East (NFE) LNG expansion project to Chinese state-controlled Sinopec.

"The agreement marks the entry of Sinopec as a shareholder in one of the NFE joint venture companies that own the NFE project," QE said.

The deal will see Sinopec take the equivalent of 5pc in one of NFE's four 8mn t/yr trains, which translates into an effective 1.25pc in the project. It bumps the foreign participation in NFE from 25pc to 26.25pc. TotalEnergies, ExxonMobil and Shell each hold an effective 6.25pc in NFE, while US firm ConocoPhillips and Italy's Eni each have an effective 3.125pc.

Sinopec's addition introduces the first Asian shareholder to the project. The agreement will not affect the participating interests of the other shareholders, QE said.

"Today's event underscores QE's commitment to deepening its relationships with key LNG consumers, while prioritising long-term strategic partnerships and alignment with world-class partners from China," Qatar's energy minister and chief executive of QE Saad bin Sherida al-Kaabi said.

QE and Sinopec in November 2022 signed a 27-year supply agreement for 4mn t/yr of LNG, starting in 2026. The deal marked the first offtake agreement from the NFE expansion, which is scheduled to come online in mid-2026. A second offtake agreement was signed in November between QE and ConocoPhillips to supply Germany with 2mn t/yr of LNG for 15 years, starting in 2026.

The agreement with Sinopec is the longest LNG supply agreement in the history of the sector, further solidifying bilateral relations between Qatar and China and offering the latter long-term supply stability. China, one of the world's largest hydrocarbon consumers, has previously held major economic and trade ties with Mideast Gulf countries, but it has begun to push for further influence in the region of late, brokering a fledgling detente between Saudi Arabia and Iran last month.

Commenting on today's agreement, Sinopec president Ma Yongsheng said "the meeting between Chinese president Xi Jinping and Qatar's emir Tamim bin Hamad al-Thani during the first China-Arab Summit and China-GCC Summit in [December] 2022, comprehensively outlined the development blueprint of the strategic partnership between the two countries and guided the China-Qatar energy co-operation."

QE and Sinopec already have a 10-year deal to supply 2mn t/yr, which started deliveries in January 2022.

The NFE expansion project will raise Qatar's LNG export capacity to 110mn t/yr from around 77mn t/yr now. The 16mn t/yr North Field South (NFS) expansion will raise capacity further to 126mn t/yr and is expected to be completed in 2027.