Dollar Reliance Shrinks — China’s LNG Deal With Qatar Challenges ‘Frenemy’ Status With US
This week, China and Qatar strengthened their bond through a significant development on Tuesday. China National Petroleum Corporation (CNPC) and Qatarenergy inked a 27-year deal, outlining China’s commitment to procure liquefied natural gas (LNG) from Qatar on an annual basis. Under the agreement, China will import a substantial four million metric tons of LNG per year from the Gulf nation. Moreover, CNPC will also obtain an equity stake in Qatar’s North Field LNG project, further solidifying their collaboration.
China and Qatar Sign 27-Year LNG Deal Further Solidifying Relationship Between Both Nations
China is making steady progress in diversifying its currency deals and lessening its dependence on the U.S. dollar, and that includes fewer natural gas imports from the United States. Alongside various other BRICS nations, the Asian nation has been strategically maneuvering to reduce the prominence of the greenback in international trade.
In a noteworthy development at the end of March, China entered into a bilateral agreement with Brazil for the procurement of liquefied natural gas (LNG), with the settlement of the transaction taking place in yuan, facilitated by a French company.
On June 20, Reuters reported that Qatar and China have reached a substantial deal for LNG, with the two countries agreeing to collaborate for 27 years. Similar to the United Arab Emirates (UAE), Qatar is an emerging economy. Both regions were upgraded by the financial markets and benchmark firm MSCI in 2014 and joined the emerging BRICS economies.
According to the report, Qatarenergy signed a multi-year partnership with CNPC, enabling China to acquire four million metric tons of LNG annually. The news came after Qatar and the UAE announced the resumption of their diplomatic ties on Monday.
Simultaneous to the agreement with CNPC, Saad al-Kaabi, Qatarenergy’s chief, also signed an identical deal with China’s petroleum and petrochemical enterprise group Sinopec. “Today we are signing two agreements that will further enhance our strong relations with one of the most important gas markets in the world and key market for Qatari energy products,” Kaabi stated.
‘Right Now, China Is a Frenemy,’ Says Louisiana Senator
American officials are divided on the matter, as an editorial published by The Cradle explains that U.S. House speaker Kevin McCarthy praised China’s previous reliance on U.S. LNG reserves but questioned its necessity, citing a Politico interview. Thecradle.co also quotes Louisiana senator Bill Cassidy, someone who believes that China’s purchase of natural gas is a win-win situation.
“China gets guaranteed shipments at a certain price by providing upfront capital,” Cassidy said. “That, in turn, helps U.S. companies build export terminals, which drives demand for more U.S. drilling in places like Louisiana and Texas.” Cassidy further insisted China is a friendly rival. “Right now, China is a frenemy. If they — just like India, South Korea, Japan, the EU — are purchasing or buying, helping to pay for the capitalization of LNG export terminals, well, that’s a good thing.”
Will China’s strategic partnerships and efforts to diversify its energy imports disrupt the dominance of the U.S. in global trade, or is it merely a temporary ‘frenemy’ dynamic? Share your thoughts and opinions about this subject in the comments section below.
