CNPC Joins Sinopec in Qatar’s Latest NFE Expansion Farm-In
Qatar’s newest partnership in the North Field East expansion project boosts China’s expected new deliveries of LNG by another 4 mpta.
China National Petroleum Corporation (CNPC) became the second Chinese national oil company to join the North Field East (NFE) LNG expansion project after it signed a new long-term LNG supply contract with QatarEnergy on 20 June in Doha.
CNPC’s entry into what the industry considers its biggest project ever follows Sinopec’s signing in mid-May for what comprises two LNG mega trains with a combined capacity of 16 mtpa.
CNPC is China’s largest national oil company, Sinopec (China Petroleum & Chemical Corp.) is No. 2.
The LNG sales and purchase agreement (SPA) between CNPC and QatarEnergy requires delivery of 4 mtpa of LNG from the NFE to CNPC’s receiving terminals in China over 27 years, the same span of time as Sinopec’s deal which was hailed in May as the industry’s longest-term SPA commitment to date, QatarEnergy reported in a news release.
Both sides also agreed that QatarEnergy will transfer to CNPC a 5% interest in the equivalent of one NFE train with a capacity of 8 mtpa, thus making CNPC a partner in the NFE expansion project without affecting the participating interests of any other shareholder.
Last summer, QatarEnergy agreed partnerships with Shell, TotalEnergies, Eni, ExxonMobil, and ConocoPhillips before inviting Sinopec and now CNPC.
CNPC showcases three LNG terminals on its website in the cities of Tangshan in Hebei Province; Rudong in Jiangsu Province; and Dalian in Liaoning Province—all built to stabilize gas supplies to the Yangtze Delta, Beijing, Tianjin, Hebei, and northeast China generally.
The Dalian LNG Project on the Dagushan peninsula supports LNG unloading, storage, regasification, transportation, and tanker loading. CNPC said the terminal can receive 10 mpta of LNG and from that, deliver 13.5 Bcm of natural gas to customers. LNG suppliers include Qatar, Australia, Iran, and Russia’s arctic Yamal region.
The Jiangsu LNG Project comprises an artificial island, receiving terminals, a dock and trestle, subsea pipeline, and gas trunk line. After regasification, natural gas flows by pipeline to the Yangtze Delta and surrounding regions.
CNPC’s Tangshan LNG project has a 640,000 m3 storage capacity and terminals capable of receiving 10 mpta. Qatar and Australia are its main LNG suppliers of gas, which when regasified, is delivered to Beijing and northeast China via the Yongqing-Tangshan-Qinhuangdao gas pipeline network, according to CNPInvest.com.
Gas Is Asia’s Low-Carbon Fuel of Choice
In its World Energy Outlook 2019, the Paris-based International Energy Agency (IEA) noted that China’s natural gas demand will more than double over the next 2 decades, “rising by 370 Bcm, more than the rest of developing Asia combined,” and driven by China’s policy of replacing coal with gas as a lower-carbon alternative.
At the time it released its outlook, the IEA noted that gas satisfied only 7% of industrial energy demand in China compared to a global average of 22%, suggesting that “considerable potential remains.”
“Although gas competes with electricity and direct use of renewables in displacing coal … its market share in industry and heat demand for buildings more than doubles over the period to 2040,” IEA analysts wrote. “By then, China consumes 650 Bcm of gas with the share of gas in the total energy mix reaching 13%, still well below the global average.”
Change in gas supply and demand in Asia, 2018-2040
Speaking at the ceremony marking CNPC’s entry into the NFE expansion, Qatar’s Energy Minister Sherida Al-Kaabi, who is also QatarEnergy’s president and CEO, praised the newest partnership as an act that will “build on the excellent relations between the People’s Republic of China and the State of Qatar” to secure “our shared ambition for a sustainable future facilitated by a cleaner, and more eco-friendly energy source that would catalyze substantial socio-economic development.”
CNPC Chairman Dai Houliang called the collaboration “a major achievement” and a “milestone in forming a strategic synergy between China’s ‘Belt and Road’ Initiative and Qatar’s National Vision 2030” that will serve the two countries “for the next 3 decades.”