China and Qatar have strengthened their bilateral ties with a significant development on Tuesday, as the China National Petroleum Corporation (CNPC) and Qatarenergy signed a 27-year deal. This agreement solidifies China’s commitment to procure liquefied natural gas (LNG) from Qatar annually, marking a shift in China’s efforts to diversify its currency deals and reduce dependence on the US dollar. Under the deal, China will import a substantial four million metric tons of LNG per year from Qatar and acquire an equity stake in Qatar’s North Field LNG project, further cementing their collaboration.
The growing relationship between China and Qatar was underscored by a bilateral agreement in March, where China secured LNG procurement from Brazil with settlement in yuan facilitated by a French company. The recent agreement with Qatar marks another significant step in China’s strategy to diminish the prominence of the US dollar in international trade, alongside other BRICS nations.
On June 20, Reuters reported that Qatar and China had reached a substantial deal for LNG, encompassing a 27-year collaboration. Qatar, similar to the United Arab Emirates, is an emerging economy and both regions were upgraded by financial markets and benchmark firm MSCI in 2014, joining the emerging BRICS economies.
According to the report, Qatarenergy and CNPC have entered a multi-year partnership, enabling China to import four million metric tons of LNG annually. This announcement coincided with the resumption of diplomatic ties between Qatar and the UAE. Additionally, Qatarenergy’s chief, Saad al-Kaabi, signed a parallel agreement with China’s petroleum and petrochemical enterprise group Sinopec, further strengthening the relationship.
The US response to China’s LNG deals has been mixed. While some American officials, such as U.S. House Speaker Kevin McCarthy, praised China’s previous reliance on US LNG reserves, others questioned its necessity. Louisiana Senator Bill Cassidy sees China’s purchase of natural gas as mutually beneficial, emphasizing the positive impact on US companies and drilling activities. Cassidy considers China a “frenemy,” acknowledging the competitive nature of the relationship while recognizing potential benefits for both sides.
The question remains whether China’s strategic partnerships and efforts to diversify its energy imports will disrupt the dominance of the US in global trade, or if this dynamic represents a temporary “frenemy” phase. Share your thoughts and opinions on this subject in the comments section below.
Frequently Asked Questions (FAQs) about LNG deal
What is the significance of the China-Qatar LNG deal?
The China-Qatar LNG deal holds significant importance as it strengthens the bilateral ties between the two nations. China’s commitment to procure liquefied natural gas (LNG) from Qatar on an annual basis signifies China’s efforts to diversify its energy imports and reduce its reliance on the US dollar. The deal includes a substantial import of four million metric tons of LNG per year and an equity stake for CNPC in Qatar’s North Field LNG project, solidifying the collaboration between the two countries.
How does this deal impact the US?
The China-Qatar LNG deal poses challenges to the US in terms of its dominance in global trade. As China strategically expands its partnerships and diversifies its energy imports, it reduces its dependence on US LNG reserves. This shift has the potential to disrupt the US position and influence in the international trade market. However, some American officials view the deal as mutually beneficial, contributing to US companies and driving demand for domestic drilling activities.
Is China considered a ‘frenemy’ in this context?
The characterization of China as a ‘frenemy’ in this context reflects the complex nature of the relationship. While there are elements of competition and rivalry, particularly in terms of global trade, China’s purchase of natural gas and collaboration with Qatar is seen by some as a positive aspect. Louisiana Senator Bill Cassidy describes China as a ‘frenemy,’ acknowledging the competitive nature while recognizing the benefits that arise from such collaborations, such as capitalizing on LNG export terminals and driving drilling demand in the US.
Will this deal disrupt the dominance of the US in global trade?
The long-term impact of the China-Qatar LNG deal on the dominance of the US in global trade remains uncertain. China’s strategic partnerships and efforts to diversify energy imports do pose challenges to the US, particularly in reducing reliance on the US dollar and LNG reserves. However, the extent of this disruption will depend on various factors, including the future dynamics of global trade, geopolitical developments, and the ability of the US to adapt and maintain its position in the evolving energy landscape.
More about LNG deal
- China National Petroleum Corporation (CNPC): Official Website
- Qatarenergy: Official Website
- North Field LNG project: Qatargas Website
- US House Speaker Kevin McCarthy: Official Website
- Politico: Website
- Louisiana Senator Bill Cassidy: Official Website
- The Cradle: Website
- Reuters: Website