OREANDA-NEWS. July 04, 2011. Despite signing preliminary agreements almost two years ago to sell more liquefied natural gas to China, Qatar Liquefied Gas Co has yet to sign contracts with Cnooc or PetroChina, Qatargas’ chief representative in Beijing said.

Qatargas has received approval from China’s National Development and Reform Commission to negotiate with Cnooc, but still isn’t authorised to begin talks with PetroChina, Qatargas’ Abdulla Hijji said on the sidelines of a conference in Beijing.

Qatargas is the Gulf country’s largest producer of LNG. Cnooc and PetroChina signed separate memorandums of understanding with Qatar in November 2009 to purchase a combined 7mn tonnes a year of LNG.

Relatively high international gas prices, increasing deliveries of pipelined gas from central Asia, piped-gas arrivals via Myanmar and possibly Russia in several years time, and further out the possible availability of large volumes of Chinese shale gas, are clouding LNG’s future role in China.

Hijji said discussions with PetroChina would only begin after a deal had been reached with Cnooc, which hopefully will happen by the end of this year.

“We’ve come a long way, but it’s not easy, of course,” Hijji said, adding that negotiations were far more complicated than just deciding on price.

A cap on China’s domestic gas price has recently discouraged Cnooc and PetroChina from boosting LNG imports to meet rising demand from Chinese residential and industrial users. However, both companies are still on track this year to import their contracted volumes, Hijji said.

Australia was the main source of the 9.36mn tonnes of LNG imported into China in 2010, a year which witnessed growth of 69% in imports. In the first five months of 2011, Qatar edged out Indonesia to take second place among suppliers, with China’s overall imports up 24% on year-earlier levels.

Qatar exported 1.2mn tonnes of LNG to China in 2010, despite a long-standing contract with Cnooc to supply up to 2mn tonnes a year. However, Qatargas will probably export full term volumes to Cnooc this year, Hijji said.

“When they (Cnooc) have the facilities ready, we will be ready to deliver,” he said. “We will reach 2mn tonnes, because the cargoes have been coming.”
 
Qatargas still expects to ship term LNG to PetroChina’s Jiangsu terminal by the year-end, Hijji said. PetroChina and Cnooc have previous agreements with Qatargas to purchase up to 5mn tonnes a year of LNG.

Domestic rival China Petroleum & Chemical Corp, known as Sinopec Corp, also recently entered into discussions with Qatar for LNG, but just how much it wants isn’t clear unclear.

On Tuesday, Qatargas announced it signed a heads of agreement with Argentine power utility Energia Argentina Sociedad Anonima, or Enarsa, to supply it with as much as 5mn tonnes of gas a year over 20 years, starting in 2014.
 
Qatar holds the world’s third-largest natural gas reserves after Russia and Iran. It is the world’s top LNG exporter by far with an installed capacity of 77mn tonnes a year, of which Qatargas has 42mn tonnes a year.