China’s state-run oil and gas company, Sinopec Corporation, has awarded a 10-year tender to buy 1 million tonnes of liquefied natural gas (LNG) per year from Qatargas, according to Reuters.
The deal shows Sinopec trying to take advantage of current low prices and will pay at a slope of 10.19% to Brent crude on a delivered ex-ship basis.
It is reported that Sinopec issued the tender in July, with supplies expected to start in 2023. The deal was signed during the period of significantly low fuel prices.
Despite this tender being a strategic deal, this is part of China’s long-term transition to gas, and demand is expected to grow, with the country’s desire to shift to cleaner fuel than coal.
The low price slope to Brent crude is good news for Qatar, regardless of the global oversupply issue, its exports were slightly higher year-on-year (YoY).
The slope to Brent indicates that the price of LNG is calculated as a percentage to a Brent crude contract.