China’s $3 Billion Qatar LNG Deal Raises an Awkward Question
Dangote Swings to $4.7 Billion Profit Ahead of Africa’s Biggest IPO Simon Watkins is a former senior FX trader and salesman, financial journalist, and best-selling author.
He was Head of Forex Institutional Sales and Trading for… Qatar’s highly sensitive geographical positioning -- between a western land border with Saudi Arabia and a northeastern maritime border with Iran -- has necessitated it treading a delicate diplomatic path between regional superpowers and their global superpower backers since it gained independence from being a British protectorate in 1971.
For much of the period from the 1945 landmark relationship foundation deal between Riyadh and Washington was signed, as fully analysed in my latest book on thenew global oil market order, Sunni Muslim powerhouse Saudi Arabia was geopolitically aligned with Washington and its allies.
On the other hand, since the Islamic Revolution of 1979, Shia Muslim powerhouse Iran has been geopolitically aligned with Beijing and Moscow.
Qatar also shares the world’s largest gas reservoir with Iran -- the South Pars/North Dome field containing 51 trillion cubic metres of gas.
Depending on whether one was sitting in Washington or Beijing in recent years, where Qatar fitted into the global geopolitical matrix was open to debate, while the emirate itself would simply have pointed to it taking a pragmatic approach.
In the run-up to Russia’s invasion of Ukraine on 24 February 2022, this approach saw it act as a vast LNG supply depot for China, which over the 12 months before the invasion had suddenly been seized by an overriding desire to stock up on what would become the world’s emergency energy source.
There followed a burst of long-dated LNG supply agreements made between Chinese buyers and Qatar, with the first landing in March 2021, when Sinopec and Qatar Petroleum agreed a decade-long deal for 2 million metric tons per year (mtpy) of LNG.
Another followed that December, this time between QatarEnergy and Guangdong Energy Group Natural Gas Co., covering 1 million mtpy from 2024 through 2034, with scope for extension.
Several similarly weighty contracts were signed in quick succession.
After the Ukraine invasion, though, Qatari LNG supplies to Europe played a critical role in ensuring that the 28 European Union (EU) member countries took a decisive stand in punishing Russia for its action.
In U.S., UK, and French circles, the EU’s previous reluctance -- led by Germany -- to meaningfully cut its dependence on cheap Russian hydrocarbons after the 2014 annexation of Crimea had long been viewed as a key factor in Putin’s calculation that a full-scale assault on Ukraine in 2022 would again carry limited consequences.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
| Mazut M100 | $450/MT | -0.15% |
| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
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