PetroChina, CNOOC Sign LNG Deals with Qatar

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Researched by Industrial Info Resources (Sugar Land, Texas)-- China Petrochemical Corporation (PetroChina) (NYSE:PTR) (Beijing) and China National Offshore Oil Corporation (CNOOC) (Beijing) have signed separate, long-term deals with Qatar for liquefied natural gas (LNG).

PetroChina signed a 25-year contract with the Qatargas Operating Company Limited (Ras Laffan Industrial City, Qatar) for 3 million tons per year of LNG. The product will most likely be shipped to a PetroChina terminal in Dalian City of Liaoning Province after its construction is completed and after Qatargas' ongoing gas project (Phase IV) is finished. Although PetroChina did not disclose details about the contract's price, analysts estimate it to be worth as much as $60 billion.

CNOOC's contract is for 2 million tons per year of LNG from Qatargas. Although information about the contract's length or cost has not been disclosed, the contract will guarantee that CNOOC will fill its terminal in China's coastal area. CNOOC, China's largest offshore gas and oil supplier, has invested in four LNG stations in the Guangdong, Fujian and Zhejiang provinces, and in Shanghai. Phase I of the Guangdong terminal went into operation in 2006, and the Fujian terminal is expected to be in operation this year.

Both of the Chinese firms have signed several similar contracts. Last September, PetroChina signed agreements with Shell (NYSE:RDS.A) (The Hague, Netherlands) and Woodside Petroleum Limited (Perth, Australia) to buy 3 million to 4 million tons per year of LNG from the two companies. The two agreements may last 20 to 30 years. PetroChina also signed an agreement with Total S.A. (NYSE:TOT) (Paris) to supply LNG to a station in Tangshan, a port city of Hebei Province. Total will supply at least 4 million tons of LNG to PetroChina, lasting 25 to 30 years.

CNOOC, has signed deals with North West Shelf Gas (Perth), BP's (NYSE:BP) (London) Tangguh gas field in Indonesia and Petroliam Nasional Berhad (Malaysia) to fill its terminals in Guangdong, Fujian and Shanghai.

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