DOHA, Nov 21 (Reuters) – QatarEnergy has signed a 27-year deal to supply China’s Sinopec with liquefied natural gas (LNG), the longest such LNG deal so far, as market volatility drives buyers to seek long-term agreements.

Following Russia’s invasion of Ukraine in February, competition for LNG has become intense, with Europe in particular needing large quantities to help replace the Russian gas pipeline which accounted for almost 40% of the country’s imports. continent.

“Today is a milestone for the first sale and purchase agreement (SPA) for the North Field East project, this is 4 million tonnes for 27 years for China’s Sinopec,” Reuters told Reuters. the head of QatarEnergy, Saad al-Kaabi, in Doha, shortly before the signing of the agreement.

“It means that long-term agreements are there and important for the seller and the buyer,” he said, adding that the agreement was the largest sale and purchase agreement ever recorded in the sector. LNG.

The North Field is part of the world’s largest gas field that Qatar shares with Iran, which calls its share South Pars.

QatarEnergy signed five agreements earlier this year for North Field East (NFE), the first and largest of North Field’s two-phase expansion plan, which includes six LNG trains that will increase Qatar’s liquefaction capacity to 126 million tonnes per year by 2027 from 77 million.

He then signed contracts with three partners for North Field South (NFS), the second phase of the expansion.

Monday’s deal, confirmed by Sinopec, is the first supply deal announced for NFE.

“It takes our relationship to new heights as we have a SPA that will last well into the 2050s,” Kaabi said.

LONG TERM SUPPLY

Kaabi said negotiations with other buyers in China and Europe who want security of supply are ongoing.

Qatar is already the world’s largest LNG exporter and its planned North Field expansion will strengthen that position and help secure long-term gas supplies to Europe as the continent seeks alternatives to Russian flows.

“I think the recent volatility has made buyers realize the importance of having a fixed, reasonably priced long-term supply for the long term,” Kaabi said.

He said the deal’s price would be similar to others in the past that were tied to crude oil.

“How we price our deals with Asia is tied to crude. We’ve done it that way in the past and that’s the mechanism we use going forward.”

The agreement was signed on an ex-ship basis, which means that QatarEnergy will handle the shipment and delivery of the LNG.

Kaabi added that negotiations for an equity stake in the Gulf country’s expansion project were underway with several entities.

The supply contract is a key part of an integrated partnership in the NFE, Sinopec said in a statement, indicating it may be involved in participation negotiations.

QatarEnergy has retained an overall 75% stake in the expansion and may sell up to 5% of its stake to certain buyers, Kaabi said.

“Major buyers who want to commit long-term to substantial volume want to see some of the profits from the upstream business…so I think that’s a big win if you will and it makes the partnership even more more solid.”

Sources told Reuters in June that China’s national oil majors were in advanced talks with Qatar to invest in NFE.

Reporting by Andrew Mills and Maha El Dahan; additional reporting by Chen Aizhu; edited by Jason Neely and Mark Potter

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