QatarEnergy and Kuwait Petroleum signed another 15-year LNG supply deal on Aug. 26 just two years after the first one in a stark sign of Kuwait’s growing need for lower-carbon fuel for power generation.
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The liquefied natural gas from Qatar will be delivered ex-ship to the Al Zour refinery LNG import terminal using Qatar’s conventional Q-Flex and Q-Max ships, the companies said in separate statements. The first agreement between both companies for 3 million metric tons per year starting in 2022 remains in force as domestic demand in Kuwait has increased, leading to the need for a second contract, a KPC source said. Qatar’s energy minister Saad al-Kaabi went to Kuwait to sign the deal, unlike other contracts where buyers went to Doha for the signing ceremony.
“This second long-term agreement with QatarEnergy within a short period of time confirms our longstanding collaboration with our Qatari brethren to provide a cleaner source of energy,” KPC CEO Sheikh Nawaf al-Sabah said in the statement. The gas will help Kuwait meet its energy transition plan to reduce emissions to net zero by 2050, he added.
Kuwait has turned to gas for low-carbon power generation instead of fuel oil in a pressing drive for more power to avoid scheduled power cuts in summer because of high air-conditioning demand. Kuwait began importing LNG in 2009 and in 2017 signed a 15-year LNG agreement with Shell for supplies starting in 2020. Kuwait also built the Middle East’s biggest refinery for power generation, the 615,000 b/d Al Zour.
“This is a new long-term partnership between KPC and QatarEnergy that constitutes a central element in supporting Kuwait’s sustainability goals particularly in the electricity generation sector,” Qatar’s Kaabi said in the statement. “It also reflects our commitment to support the future needs of all our clients, foremost of which is KPC.”
Spot LNG prices for delivery into Asia are well below their 2022 record highs. Platts, part of S&P Global Commodity Insights, assessed the benchmark JKM price for delivery into Northeast Asia at $13.50/MMBtu on Aug. 26, down from the record $74.86/MMBtu in March 2022.
QatarEnergy is set to double its LNG production capacity over the next few years from North Field in the Persian Gulf and Golden Pass in the US. A further expansion announced Feb. 25 will push capacity to 142 MMt/y by the end of 2030 from 77 MMt/y currently and 127 MMt/y planned by 2027.
