China Buys Up Share of Qatar Natural Gas Project, Expanding Deeper into Middle East

China’s oil and gas giant Sinopec announced on Wednesday that it had signed a deal with QatarEnergy, which manages the nation’s prodigious supplies of liquefied natural gas (LNG), to become a shareholder in the latter’s North Field East (NFE) expansion project, granting China unprecedented control over an LNG source.

“The total investment of the NFE project is $28.75 billion, which will raise Qatar’s LNG export capacity from the current 77 MTPA to 110 MTPA [million tonnes per annum],” Sinopec detailed in its announcement. “The signing of the agreement makes Sinopec the first Asian shareholder in the NFE project. The cooperation will help Sinopec optimize the energy consumption mix in China and secure long-term and reliable clean energy supply to the nation.”

The agreement gives Sinopec, a Chinese government-owned company, a 1.25-percent stake in the project. Other stakeholders including ExxonMobil, Shell, and ConocoPhillips, according to S&P Global. QatarEnergy is owned by the government of that country; Saad al Kaabi, the CEO of QatarEnergy, is also the country’s minister of state for energy affairs.

Sinopec and QatarEnergy have invested years in strengthening ties. In November, the two companies announced an agreement in which the Qatari company agreed to provide Sinopec with 4 million tons of LNG annually for 27 years. The LNG was slated to come from the NFE project that Sinopec announced it now partially owns as of this week.

At the time, the Sinopec deal was viewed as a significant setback for Europe, and specifically Germany, which is heavily dependent on Russian gas and attempted to strike a deal with Qatar, but failed. According to Asian News International (ANI), QatarEnergy was frustrated with Germany for seeking shorter-term arrangements as part of its “green” energy agenda to eliminate LNG entirely.

Al-Kaabi, the Qatari energy minister, also lamented in December that negotiations with Germany were difficult because German leaders openly condemned Qatar’s abhorrent human rights abuses against LGBT people, including reports that police gang-rape suspected LGBT people in “sting” operations to find them.

“The West says that we as Qataris have to change. That we need to change our religion, our beliefs, and do what they think is right: fully accept LGBTQ. Where is my human right to choose what I want for my religion, my country, my children and my family?” the minister asked.

On Wednesday, al-Kaabi hinted that the major advance of Chinese industry into the Qatari sphere had not reached its conclusion and the two companies would cooperate “even further” in the future. He suggested QatarEnergy would prioritize Sinopec over other potential partners.

The deal represents a significant advance for Beijing’s ambitions in the Middle East and its plans to establish control over critical energy resources. China is the world’s largest importer of LNG and the world’s largest importer of crude oil, as it does not have significant known amounts of reserves of either fuel. China already relies heavily on Saudi Arabia for its oil needs – and recently signed a deal for Saudi-owned Aramco to build new refineries on Chinese soil – but has dedicated the past year to expanding both influence and market presence in the rest of the region.

Chinese dictator Xi Jinping visited Riyadh, Saudi Arabia, in December, to meet with both Crown Prince Mohammed bin Salman and the leaders of several other regional powers, members of the Gulf Cooperation Council (GCC). Xi met with the emir of Qatar, Sheikh Tamim bin Hamad al-Thani, on December 9 and discussed China’s interest in the LNG industry, specifically, according to the Chinese Foreign Ministry readout of the meeting.

“China supports Qatar in advancing its National Vision 2030, and is ready to expand cooperation with Qatar in natural gas and other traditional energy sectors as well as photovoltaic, wind and other renewable energy sectors,” Xi reportedly said, “and upgrade bilateral cooperation in the fields of finance and investment.”

In 2019 the two leaders discussed potential LNG cooperation; Xi did not leave China after the onset of the Wuhan coronavirus pandemic until his visits to Uzbekistan, Kazakhstan, and Saudi Arabia last year.

“We are happy to provide China with liquid gas and we are ready to provide China with more in the near future. I am very happy to be in China,” Emir al-Thani said during that encounter, which took place in Beijing.

Qatar is a member of China’s Belt and Road Initiative (BRI), a global debt-trap project in which China offers poor countries predatory loans to erode their sovereignty, and the two countries have vocally supported each other in the face of global human rights activists’ condemnation of the atrocities committed by both of their regimes. China was especially supportive of Qatar’s role as the host of the 2022 FIFA World Cup, widely considered a disgrace given the documented use of slave labor to build the facilities and the repression of both Qataris and visiting sports fans in its wake.

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