Page 7 - MEOG Week 13 2021

MEOG COMMENTARY MEOG

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

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