Page 7 - MEOG Week 20 2021

MEOG COMMENTARY MEOG

fund new projects. The source added that Qatar Beijing suspended all activities under the Chi-
was not necessarily opposed to partnering with na-Australia Strategic Economic Dialogue, this
these companies, but would be seeking terms has led to mounting speculation over what will
that are more favourable to it. happen to Chinese imports of Australian LNG.
This is in line with QP’s previous comments, Some believe that China relies too heavily on
suggesting it would consider undertaking the Australian LNG – which accounts for over 40%
North Field expansion alone if it could not reach of its imports of the fuel – to take such drastic
a favourable deal with any partners. Indeed, action, but others argue that as with coal, Bei-
Qatar’s LNG development has helped the coun- jing will not be deterred by the cost of any such
try to build up a sovereign wealth fund holding moves.
more than $350bn in assets, putting QP in a good Indeed, Bloomberg reported this week that
position to move forward even if it does end up at least two of China’s smaller LNG importers
going it alone. Nonetheless, reports of these talks had been told to avoid buying new cargoes from
suggest that partners – whether Chinese or oth- Australia. The verbal orders are reported to have
erwise – have not yet been ruled out. come from government officials, according
Other comments by Al-Kaabi suggest that to sources familiar with the matter, and affect
Qatar still sees IOCs as useful partners, but for future LNG purchases from Australia over the
helping it secure access to global buyers, rather next year, but not already purchased or con-
than for funding new capacity. This has led to tracted cargoes.
speculation that these companies could carry on Larger Chinese importers of LNG, which
participating in Qatar’s LNG industry, but with account for a combined 90% of imports, have not
their level of participation reduced. been given any such guidance as yet, according
to separate traders cited by Bloomberg. The news
Chinese relations service suggested that this meant the impact on
For China, meanwhile, new partnerships with LNG imports may be limited; however, a further
Qatar could be timely, given the Asian country’s escalation of tensions that ends up affecting LNG
worsening relations with Australia. The dispute cannot be ruled out.
between the two countries has led to various In addition, Chinese companies are already
unofficial bans and tariff actions by Beijing reluctant to sign long-term LNG supply con-
against Australian commodities and products. tracts with Australian exporters or invest in new
Notably, this included an informal ban on projects since relations between the two coun-
Australian coal, imposed last year following tries worsened last year. Under these circum-
Canberra’s call for an independent investigation stances, investing in LNG projects elsewhere
into the origins of the coronavirus (COVID-19). could look all the more attractive.
However, the move away from Australian Sinopec has already signed a long-term sup-
coal has left China more dependent on Austral- ply deal with QP earlier this year. This could be a
ian LNG. As tensions escalated last week and sign of things to come.™

Week 20 19•May•2021 www. NEWSBASE .com P7