This is one of the largest mega deals in the relatively recent history of LNG: Qatar has been supplying LNG to China for 27 years. Both countries have signed one of the largest ever LNG deals. Qatar Energy (QE) announced that, starting in 2026, it will supply 4 million tons of LNG annually to the Chinese company Sinopec.
The agreement, which was signed by Qatar’s Energy Minister and Chairman of the Qatar Stock Exchange Saad Al-Kaabi and Chairman of the Board of Directors of Sinopec MA Yongsheng, according to calculations conducted by bloomberg worth $61 billion. Al-Kaabi said the deal would support “the excellent bilateral relations between China and Qatar and help meet China’s growing energy needs.”
Qatar is investing $30 billion to expand the North Field, one of the world’s largest natural gas reserves, and onshore liquefaction facilities. Incidentally, investors such as Shell Plc and Exxon Mobil Corp. are also participating. These systems cool natural gas to -162 degrees, where it turns into a liquid and occupies a 640-fold reduced volume. Only with the help of this energy-intensive trick could they be transported over longer distances on special ships.
The unique deposit was discovered in 1971. However, it was only possible to extract the precious gas from the depths and transport it over long distances using new technical methods. The location was too far from the markets for the hitherto familiar pipeline transportation of natural gas, and production and transportation were not profitable.
It is a complex chemical factory in the sea. The way the gas flows out of the ground is unusable. It brings with it a number of sulfur compounds from the soil, as well as cannethiols, which are organic compounds that are released during putrefactive processes. It also contains traces of mercury. The different parts are separated from the natural gas, and the water is separated, cleaned and returned to the sea. Drilling technicians drove a riser tube deep into the ground. The gas comes to the surface in a controlled manner through this tube. In the riser tube there are many holes. Gas from the tank penetrates through them and flows upward. The gas pressure and the amount of gas being regulated are measured at a fiery junction—the shut-off valve, so to speak. Already processed gas flows at high pressure through white tubes towards the mainland.
From a geological point of view, the countries surrounding the Gulf were simply lucky because large quantities of oil and gas were stored in these regions throughout the history of the earth. These gas reserves have fundamentally changed Qatar more than almost any other country. Half the size of Hesse, only about 800,000 people live here. Gas has made Qatar a rich country, very rich, and a major player in the global gas market. The country has bought “gas dollars” everywhere in the world, from industrial holdings to football clubs like Saint-Germain in Paris. Today, Qatar participates in almost all major German companies, pays research institutes to participate in the latest research, and at the same time shakes its head at the fact that an industrialized country shuts itself off from its main sources of energy.
Qatar is already producing at full capacity, and it is not possible to do more. With close to $30 billion, Qatar is expanding its production capacities, but it will not be able to deliver before the end of 2025. Most of the goods are also shipped to Asia under long-term contracts.
But production facilities are fully booked with long-term contracts, and the country can only increase delivery volumes with expansions.
On the hot Ras Laffan beach near the capital, Doha, huge industrial plants are pounded into the desert soil – at the same time one of the largest construction sites in the world. Because construction is still going on, and it’s a construction site where – by the way – people from more than 40 countries work. Ras Laffan is a giant natural gas processing complex, basically nothing more than a giant refrigerator in the desert.
liquefied natural gas
Huge plants process gas and separate sulfur, among other things, which can sell very well. The cooling process takes place in several stages in huge cooling units. However, the energy required for cooling is colossal. After all, the temperature difference of -161 degrees must be overcome between cold gas and outdoor temperatures of up to +50 degrees. But there is a lot of energy here, so no one has to calculate it exactly. A total of 15 percent of the energy in natural gas is used for liquefaction and transportation alone.
Countries around the world are scrambling to provide fuel for power and heating plants from major exporters such as Qatar and the United States, driving up prices. The global market for liquefied natural gas is almost exhausted, and hardly any new natural gas will be produced before 2026. With this “pioneer” (bloomberg) Agreement, China wants to secure its energy security for decades.
Europe is trying to replace Russian gas via pipelines with LNG, but talks with Qatar have stalled. Germany in particular is not willing to accept long-term contracts. Many EU governments want to phase out fossil fuels and believe LNG deals would run counter to their “climate goals”.
In March, the current Federal Minister of Economy, Habak, traveled to Qatar and innocently asked about LNG. Habecks-Bückling’s wry smile and naive inquiry from the country experts, who, as proven experts, have an engineering degree in England or the USA, were unmistakable. However, due to the very high investment amounts, they are only interested in long-term contracts. However, Habeck made it clear that he only wanted LNG for a short period of a few months, when it would be ready to be collected into gas cylinders. Gas is only a transitional energy source. It is now clear that China is focusing on gas for the long term, not wind and solar power.
Meanwhile, Japan also warns that global competition for LNG will intensify over the next three years. Because very little is invested in the show. Japan, which has almost no coal or gas reserves of its own, has long been supplying LNG to Qatar with private LNG vessels and is the largest LNG importer. Once again Germany goes empty handed and wants to warm up with hope.