UK major Shell and Qatar’s state-owned QatarEnergy have signed a long-term LNG sale and purchase agreement (SPA) to supply the former’s customers in China with 3 million tons per year of the superchilled fuel.

Under the supply agreement, LNG cargo deliveries to Shell’s end-consumers in China will begin in January 2025, according to a statement by QatarEnergy on Dec. 2.

The state-owned LNG behemoth did not disclose the duration or pricing terms of the contract, and neither company specified whether volumes will be delivered on a delivered ex ship- or f.o.b.-basis.

“This agreement helps meet the requirements of Shell’s end-customers in China and enhances our contributions to meeting the needs of LNG end-users worldwide,” said Qatari Energy Minister and QatarEnergy CEO Saad al-Kaabi. He noted that this agreement marks the 11th LNG contract between QatarEnergy and Shell, which is also a stakeholder in Qatar’s 64 million ton/yr North Field LNG expansion project.

Shell declined to comment on the details of the contract, and QatarEnergy did not respond to questions by press time.

Chinese Customers

While it was not immediately clear which of Shell’s Chinese end-customers will be supplied with the Qatari cargoes, a Chinese LNG trader told Energy Intelligence that Shell can use volumes through this contract to backfill its existing short positions in China.

The Chinese LNG trader was referring to short positions under multiple long-term supply contracts with the two Chinese state-owned LNG buyers, China National Offshore Oil Corp. (CNOOC) and PetroChina.

Shell supplies CNOOC from its global portfolio through two SPAs, each running until 2035 and totaling over 8 million tons/yr of LNG supplies, according to data from commodity analytics firm Kpler.

The major also has another two supply agreements with PetroChina: one for 2 million tons/yr, running into 2036, and a separate shorter duration deal for the supply of 400,000 tons of carbon-neutral LNG, valid until 2026, Kpler showed.

Elsewhere in Asia

The agreement with Shell comes just a month after a Qatari delegation, led by al-Kaabi, visited major LNG buying and shipping firms in Japan and South Korea, likely to market volumes from the Gulf state’s North Field LNG expansion project, amid falling LNG demand in both countries.

Japan’s largest LNG buyer Jera has been in negotiations with QatarEnergy over a potential supply agreement. Tokyo is understood to have been supportive of Japanese utilities entering into new LNG supply contracts with Qatar, but so far, no new supply deal has emerged between the parties.

Prior to this deal, QatarEnergy has already allocated a total of 35.3 million tons/yr to Asian and European buyers from the 32 million ton/yr North Field East and 16 million ton/yr North Field East expansion phases, which will be brought on line in 2026 and 2027, respectively.

At the same time, QatarEnergy is also pursuing a major $20 billion LNG fleet expansion program to underpin its expansion project through several deals with South Korean and Chinese shipyards, which are set to take the Qatari LNG fleet to 128 vessels.