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Shell PLC has committed to buy three million tons per annum (MMtpa) of liquefied natural gas (LNG) from QatarEnergy for the British energy giant’s activities in China.
Delivery under the long-term deal will start January 2025, QatarEnergy said in an online statement, not specifying the duration of the agreement.
“This agreement helps meet the requirements of Shell’s end customers in China and enhances our contributions to meeting the needs of LNG end-users worldwide”, said QatarEnergy president and chief executive Saad Sherida Al-Kaab, who is also Qatar’s energy affairs minister.
This is the 11th sale and purchase agreement between Shell and QatarEnergy, Al-Kaabi said.
The transaction “highlights the continued growth of China’s LNG market, which is projected to be the largest globally”, state-owned QatarEnergy said.
Shell earlier signed two agreements with QatarEnergy for up to 3.5 MMtpa of for 27 years. The supply is for the Netherlands and to be sourced from the North Field east expansion project, according to a press release by QatarEnergy October 18, 2023.
Shell holds stakes in the east and south expansions of Qatar’s North Field.
The Gulf state announced a third North Field expansion project early 2024. The projects are expected to raise Qatar’s production capacity from the current 77 MMtpa to 142 MMtpa by 2030.
“[E]xtensive appraisal drilling and testing have confirmed that productive layers of Qatar’s giant North Field extend towards the west, which allows for developing a new LNG production project in Ras Laffan”, QatarEnergy said in a statement February 25 announcing North Field West.
The new exploration results raised the Gulf state’s gas reserves to over 2,000 trillion cubic feet. Discovered 1971, the North Field is the largest gas field in the world spanning 2.3 square miles or about half of Qatar’s land area, according to QatarEnergy.
QatarEnergy has secured multiple long-term offtake deals for the North Field expansion projects, in a spurt of transactions following the energy trade disruption that resulted from Russia’s invasion of Ukraine in 2022.
Meanwhile Shell aims to grow its LNG production by 20–30 percent by 2030 relative to 2022, as declared in the company’s Energy Transition Strategy 2024 report.
It said in an outlook report February 14, 2024, that it expected global LNG demand to grow by over 50 percent by 2040, driven by an accelerating industrial switch from coal to gas in China and economic growth-driven demand in South and Southeast Asia.
On June 18, 2024, Shell said it had signed an agreement to acquire Singapore-based LNG trader Pavilion Energy Pte. Ltd. It said it expected the transaction to be completed in the first quarter of 2025.
Shell owns operating and non-operating interests in already producing LNG plants in Australia, Brunei, Egypt, Nigeria, Oman, Peru, Qatar and Trinidad and Tobago as of December 2023, according to its annual report. As of the period, it had three more under-construction LNG plants, located in Canada, Nigeria and Qatar.
