Page 13 - AsianOil Week 13 2021

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QP will review bidders’ technical and com- To date, Qatar has supplied China with
mercial capabilities with the objective of assign- more than 62mn tonnes of LNG since it began
ing selected ship owners to construction slots deliveries to the Asian country in 2009. And
that were previously reserved at a number of given that China has adopted a target of net-
Chinese and Korean shipyards to build up to zero greenhouse gas (GHG) emissions by
100 new LNG carriers. The company described 2060, it appears set to require more LNG over
this as the largest LNG shipbuilding programme the coming years as it continues to shift away
in history when it was unveiled last year, with a from coal to natural gas.
price tag of up to QAR70bn ($19bn). For QP, the deal is the latest in a series the
Now, Qatari Minister of State for Energy company has announced since February – all
Affairs Saad Sherida al-Kaabi, who is also QP’s with buyers from Asian countries. It has also
president and CEO, hailed the release of the ITT recently struck a long-term deal to supply
package as a step towards “securing the most 1.25mn tpy to Bangladesh via commodity trader
qualified ship owners and operators” for the Vitol from later this year, and another to supply
company’s future LNG carrier fleet. 3mn tpy to Pakistan under a 10-year deal start-
“The release of this ITT package reflects the ing in 2022.
steadfast progress Qatar Petroleum is making on The string of deals suggests that the
the expansion of our LNG production capacity Middle Eastern company is pushing to find
both in Qatar and abroad,” al-Kaabi said. more buyers as it prepares to expand its liq-
uefaction capacity. Given the fact that global
Supply deal demand for LNG has picked up since last
Meanwhile, the supply deal between QP and year, and an increasing number of countries
Sinopec comes as the Chinese company’s first are focusing on decarbonisation and coal-
long-term sale and purchase agreement (SPA) to-gas switching, it appears likely that fur-
with Qatar. Under the deal, QP will supply Sin- ther deals could follow.
opec with 2mn tpy of LNG for a 10-year period The size and duration of the deals QP is
starting in January 2022. Deliveries will be made announcing suggests that buyers are simultane-
to Sinopec’s terminals in China. ously keen to keep their options open while still
According to S&P Global Platts, the deal trying to protect themselves from spot market
was originally negotiated in 2020 at 10.19% of volatility. The International Gas Union (IGU)
Brent slope, which it said at the time was likely said in its 2020 World LNG Report last year that
the lowest slope in the history of LNG. This by 2019, the typical SPA length had come down
illustrates how intense competition in the LNG to 11-20 years, from 20+ years previously. This
market had become last year, amid a global over- trend was playing out before the pandemic hit,
supply and a slump in demand caused by the and the duration of QP’s latest SPAs is lower still,
coronavirus (COVID-19) pandemic. The price but it is clear that interest in securing long-term
involved in the finalised deal between QP and volumes still remains.
Sinopec has not been reported, and buyers and This bodes well for QP as it proceeds with its
sellers do not typically comment on commercial expansion plans. More LNG-related announce-
arrangements. ments from the company are likely to follow.™

Week 13 01•April•2021 www. NEWSBASE .com P13