QP inks first long term LNG supply deal with Sinopec for China

New York — Qatar Petroleum has finalized a 10-year LNG Sale and Purchase Agreement with China Petroleum & Chemical Corporation (Sinopec) for the supply of 2 million tons/yr of LNG for China, the company has said March 22.

Under the deal -- originally negotiated in 2020 -- shipments will begin in January 2022, and will be delivered to Sinopec's LNG terminals in China, according to the statement.

This agreement will be Sinopec's first long-term LNG SPA from Qatar, QP said.

S&P Global Platts JKM -- the benchmark for spot LNG in Northeast Asia -- for May delivery was assessed lower by 6.2 cents/MMBtu at $6.488/MMBtu on March 22.

However, Qatar has supplied China with more than 62 million tons of LNG since 2009. It is also a main driver of the growth in the global LNG market as the government adopts increasingly progressive environmental policies, QP said.

Domestic demand for gas has surged in the world's second-largest economy. China's state-owned CNOOC supplied more than 24 billion cu m of natural gas during the winter-spring heating season of 2020-2021, a record high, up nearly 25% year on year, state-owned media China Daily reported March 19, citing the national oil and gas company.

Companies like China's Sinopec and Taiwan's CPC have managed to attain record-low Brent-linked term pricing in 2020. Sinopec awarded QP the deal at a 10.19% of Brent slope, likely the lowest slope in the history of LNG, SP Global Platts reported in 2020.