Page 5 - GLNG Week 12 2021

GLNG COMMENTARY GLNG

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

Week 12 26•March•2021 www. NEWSBASE .com P5