Page 5 - GLNG Week 08 2021

GLNG COMMENTARY GLNG

QP continues its
efforts to contract out
current and future LNG
production.

says that the NFE expansion would be “the most steps it is taking to minimise emissions, and
competitive LNG project in the world”. Even indeed the NFE expansion will include a carbon
ahead of output from the expansion entering capture and storage (CCS) facility that QP said
the market, though, the country has shown a would be integrated into the company’s wider
willingness to offer LNG offtake at low prices, CCS scheme in Ras Laffan. Once the CCS facil-
in the hopes that this will give it a competitive ity is fully operational, it will be the largest of its
edge in the global market. kind by capacity in the LNG industry, as well
In September 2020, Qatargas won a 10-year as one of the biggest ever developed globally,
tender to supply China’s Sinopec with 1mn according to Qatari Minister of State for Energy
tpy of LNG from 2020. Media at the time cited Affairs Saad Sherida Al-Kaabi, who is also pres-
sources familiar with the matter as saying Sino- ident and CEO of QP.
pec had agreed to pay at a slope of 10.00-10.19% The emphasis on environmental goals and
to Brent crude. Market intelligence firm ICIS lowering GHG emissions comes as a growing
compared this to historic LNG contracts that number of countries spells out concrete steps
were typically agreed at slopes of 14-15%, noting towards decarbonisation. LNG is seen to have
the downward pressure on LNG prices that was a significant role to play in displacing coal in
particularly evident last year. Only a handful of power generation, but beyond that and in the
LNG supply deals have been reported at lower longer term, producers increasingly need to There is added
levels than the Qatargas-Sinopec deal, accord- demonstrate the environmental credentials of
ing to ICIS. their gas. pressure to
Separately, Qatar has been preparing to ramp For Qatar, there is added pressure to secure secure offtakers
up shipments to the UK – where it is already the offtakers as a number of existing supply deals
largest supplier of LNG by far. In October, QP worth more than 20mn tpy in total are set to as a number of
reserved capacity for up to 7.2mn tpy of LNG expire by 2025. It is thus unsurprising that in an
at the UK’s Isle of Grain terminal from 2025 increasingly competitive market, the country existing supply
to 2050. This is around 11% more than Qatar will pursue various strategies, including offering
shipped to the UK in 2019, and will lock up low prices and taking steps on decarbonisation. deals worth more
about 40% of the facility’s capacity following its Buyers cannot necessarily be guaranteed than 20mn tpy in
expansion. to secure the lowest possible prices for LNG
And elsewhere in the world, QP signed a deal from Qatar, though. Efforts by India to rene- total are set to
in November to sell 1.8mn tpy of LNG to Sin- gotiate the price in an existing supply deal
gapore’s Pavilion Energy over a 10-year period with Qatar last year came to nothing, for expire by 2025.
from 2023. With this deal, Qatar is also keen example. India had been trying to move away
to illustrate its environmental credentials, and from oil-linked pricing as spot prices for LNG
each cargo delivered to Singapore under the sank to new lows in 2020. However, Qatar
agreement will come with a statement of green- resisted these efforts – though it is worth not-
house gas (GHG) emissions from wellhead to ing that it may be more open to negotiating
discharge port. new contracts with different terms than it was
Qatar has increasingly been talking up the to renegotiating existing agreements.™

Week 08 26•February•2021 www. NEWSBASE .com P5