QatarEnergy, Shell agree 27-year LNG supply

Qatar has further expanded its long-term gas supply to Europe, reaching a supply deal with the Netherlands to provide 3.5 million metric tons of liquefied natural gas (LNG) a year for 27 years.

Two LNG sale and purchase agreements were signed between affiliates of QatarEnergy and Shell (LON:RDSa), QatarEnergy said on Wednesday, in a deal that mirrors one reached with TotalEnergies (LON:TTEF) last week.

Qatari LNG from the massive North Field LNG production expansion project will be delivered to Gate LNG terminal at the Port of Rotterdam beginning in 2026.

“The LNG volumes will be sourced from the two joint ventures between QatarEnergy and Shell that hold interests in Qatar’s North Field East (NFE) and North Field South (NFS) expansion projects,” QatarEnergy said in a statement.

Shell holds a 6.25% stake in the North Field East project and a 9.375% share in the North Field South project.

The deal follows an identical one between QatarEnergy and TotalEnergies last week, until then Qatar’s biggest and longest gas supply deal with Europe.

Asia, with an appetite for long-term sales and purchase agreements, has thus far outpaced Europe in locking in supply from Qatar’s two-phase expansion plan that will raise its liquefaction capacity to 126 million metric tons a year by 2027 from 77 million.

QatarEnergy has signed deals to supply LNG from the expansion to Asian buyers over the past year in China and elsewhere.

The Asian deals include a 27-year supply agreement with China’s Sinopec sealed in November last year for 4 million metric tons a year and an identical one signed in June with China National Petroleum Corporation (CNPC).

Qatar is the world’s top LNG exporter and competition for LNG has ramped up since the beginning of the war in Ukraine, with Europe in particular needing vast amounts to help replace Russian pipeline gas that used to make up almost 40% of the continent’s imports.

“These agreements reaffirm Qatar’s commitment to help meeting Europe’s energy demands and bolstering its energy security with a source known for its superior economic and environmental qualities,” QatarEnergy chief Saad al-Kaabi said in the statement.

QatarEnergy, Shell agree 27-year LNG supply