Europe and China Agree to Increase Gas Purchases from Qatar Instead of Russian Supply

Written by Henrik Rothen

Feb.21 - 2024 9:09 PM CET

Europe and China Agree to Increase Gas Purchases from Qatar Instead of Russian Supply.

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While Vladimir Putin is persuading China to construct the new "Power of Siberia-2" pipeline and offering Germany to "turn the valve" to initiate "Nord Stream-2," Chinese and European gas importers are stepping up their purchases in Qatar.

Bloomberg reports that the Qatari state corporation QatarEnergy is preparing to sign new contracts for the supply of liquefied natural gas (LNG) to China and the European Union.

QatarEnergy, one of the world's largest LNG exporters, already has a 27-year contract with China's CPCC and plans to conclude a similar deal with Sinopec — China's second-largest oil and gas company by production volume. Additionally, deals are planned with European majors — French TotalEnergies, Italian Eni, Anglo-Dutch Shell, as well as American ConocoPhillips and ExxonMobil.

All of them have previously acquired stakes in the North Field gas field, from which gas will be supplied to their customers.

Qatari gas will replace Russian gas in Europe, whose supplies last year dropped to levels seen during the era of Leonid Brezhnev. Gazprom pumped only 28 billion cubic meters to its once largest market — the lowest volume since 1975-80. Gazprom sold slightly less — about 22 billion cubic meters — to China.

In 2024, supplies via the "Power of Siberia" pipeline could increase to approximately 30 billion cubic meters, but even when the pipeline operates at full capacity — 38 billion cubic meters per year — it will only compensate for just over one-fifth of the former export to the European Union.

Putin proposed to China to increase gas imports to 100 billion cubic meters per year. However, two meetings with Chinese President Xi Jinping — in March and October — were unproductive: Beijing did not sign a contract for "Power of Siberia-2."

China is unwilling to invest a single yuan in the new pipeline, suggesting that Russia fully pay the multi-billion dollar construction bill, and also demands discounts on Russian gas, a source familiar with the situation in Moscow told The South China Morning Post.

"Beijing understands very well that it can dictate its terms and that it is in a much stronger position (than Russia)," the source explained. "Regarding construction, Beijing wants to be sure that there will be no risks or expenses for it. Russia is the party that will fully pay the bill."

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