LNG

QatarEnergy, the world’s leading liquefied natural gas company, reported a 58 percent jump in annual net profits after demand for cargoes soared along with prices as European countries tried to replace halted Russian pipeline gas supplies with LNG.

QatarEnergy’s net profits came to 154.6 billion Qatari riyals ($42.2Bln) in 2022 compared with 97.9Bln riyals ($26.7Bln) in 2021.

The Doha-based company reported a surge in revenues to almost 189Bln riyals ($51.56Bln) in the 12 months to the end of December, which was 57 percent higher than the 120.3Bln riyals logged in 2021.

QatarEnergy’s deliveries are a mixture of long-term contracts and the sale of spot cargoes with prices for such shipments soaring five-fold to $50 per million British thermal units in mid-2022 after the Russian invasion of Ukraine compared with the mid-2021 prices of under $10 per MMBtu.

Matching majors

By way of comparison QatarEnergy’s earnings are on a par with the largest global oil and gas companies such as ExxonMobil Corp. and Shell plc who reported record profits last year of $56Bln and $40Bln respectively.

QatarEnergy’s performance was only bettered by the Middle East regional giant, Saudi Aramco, the world’s largest oil-producer based in Dhahran in Saudi Arabia.

Saudi Aramco’s annual net income in 2022 came to $161.1Bln on stronger crude oil prices and higher volumes sold and this was almost four times higher than QatarEnergy’s profit and those of the leading global energy majors.

Aramco’s net income was 46.5 percent higher than in 2021 when $110.0Bln was posted and was well above the $49.1Bln reported in 2020.

While Saudi Aramco profits outpaced the LNG producer’s, QatarEnergy is set to increase annual income in the years ahead from an expansion programme to boost production.

Qatar is currently developing two LNG expansion project, the North Field South (NFS) joint venture and the NFE venture in partnerships with international energy majors and when completed will take Qatar's output from 77 million tonnes per annum to 126 MTPA.

The two Qatari LNG expansions involve feed-gas developments in the prolific North Field in the Arabian Gulf and the construction of an additional six mega-Trains each with 8 MTPA of output.

The NFS venture will have two mega-Trains while the NFE project will have four of the mega-Trains processing the Gulf gas for export.

Indian liquefied natural gas imports suffered another large monthly fall by more than 16 percent because of the slowing economy and the higher prices needed to attract additional shipments from the higher-priced Atlantic Basin.

China Petroleum & Chemical Corp., known as Sinopec, and an importer of liquefied natural gas cargoes from Queensland in Australia and from the US and Qatar, reported a more than 5 percent first-half increase in domestic natural gas output to partially offset its LNG needs.

Russian pipeline natural gas giant Gazprom and the Chinese energy major, China National Petroleum Corp. (CNPC), have signed a new long-term Sales and Purchase Agreement for additional gas to be supplied in the Far East via Mongolia.

“The signing of this document is an important step towards further strengthening the mutually beneficial cooperation between Russia and China in the gas sector,” said Gazprom.

“As soon as the project reaches its full capacity, the amount of Russian pipeline gas supplies to China is going to grow by 10 billion cubic metres, totalling 48 Bcm per year,” added the company.

Gazprom, based in Saint Petersburg, said these deliveries to China include those via the existing “Power of Siberia” gas trunkline.

“This is the second contract to be signed for Russian gas supplies to China, and it is indicative of the exceptionally strong mutual trust and partnership between our countries and companies,” said Gazprom Chief Executive Alexey Miller.

“Our Chinese partners from CNPC have already seen for themselves that Gazprom is a reliable gas supplier,” stated Miller.

Gazprom stated that CNPC, a state-owned oil and gas company, had emerged as Gazprom’s main partner in China.

Power of Siberia II

Gazprom and CNPC signed their 30-year Sales and Purchase Agreement for 38 Bcm per annum in 2014 via the “Power of Siberia” gas pipeline.

The actual start of deliveries to the Chinese was on the 2nd of December 2019 when a ceremony was held to mark the event.

Gazprom explained that in January 2022, a feasibility study was completed for the Soyuz Vostok gas trunkline construction project.

The Soyuz Vostok pipeline will stretch for 963 kilometres (598 miles) on Mongolian territory and will also include five compressor stations.

The trunkline will become an extension of Russia's “Power of Siberia II” gas pipeline and will make it possible to supply the additional 10 Bcm per year to China.

The “Power of Siberia” pipeline is 3,000-kilometres (1,865-mile) in length for the Russian section to the Chinese border.

Analysts note that Russia had been offering to get a pipeline built to China for about a decade before China through CNPC agreed to it in 2014.

They said that the timing of that 2014 agreement was not accidental, but followed sanctions that Western countries imposed on Russia after it invaded Ukraine and took over Crimea.

Now that the Ukraine crisis with Russia has again blown up, the Russians have announced a new China gas supply deal.

It comes at a time when the Nord Stream II pipeline for Russian gas to Germany has been blocked by the Germans supported by the European Union and the project suspension is now tied up with the Ukraine issue.

China is already the world's largest natural gas consumer in 2022 and buys about 43 percent of its gas from abroad, including 106 Bcm (79 million tonnes) of LNG and 58 Bcm of pipeline gas, according to the country's General Administration of Customs.