Affiliates of state-owned QatarEnergy and Italy's Eni have signed a 27-year sale and purchase agreement for the supply of up to one million tonnes of liquefied natural gas a year as European nations seek to diversify their sources of gas imports.
The LNG will be delivered to FSRU Italia, a floating storage and regasification unit in the port of Piombino, in Italy’s Tuscany region, QatarEnergy said in a statement on Monday.
LNG deliveries are expected to start in 2026 and will be sourced from the joint venture between QatarEnergy and Eni that holds an interest in Qatar’s North Field East (NFE) expansion project.
"Our partnership with Eni has borne fruitful results including LNG deliveries through the Fluxys LNG terminal in Belgium’s Zeebrugge port and upstream exploration projects in various locations around the world," said Saad Al-Kaabi, Qatar's Energy Minister and president and chief executive of QatarEnergy.
“Together, we will continue to demonstrate commitment to the European markets in general and to the Italian market in particular. Since 2009, Qatari LNG has been arriving at the Adriatic LNG terminal in the northern Adriatic to meet more than 10 per cent of Italy’s natural gas requirements.”
Eni is a partner in the 32 million tonnes per annum NFE expansion project with a 3.125 per cent share.
This month, QatarEnergy entered a similar 27-year agreement with France's TotalEnergies for the supply of up to 3.5 million tonnes of LNG.
The state-run energy company has also signed sales and purchase agreements with ConocoPhillips to deliver up to two million tonnes of LNG to Germany each year.
Europe has been diversifying its sources of natural gas since the start of the Russia-Ukraine war last year, which resulted in Moscow sharply reducing its gas exports.
Global LNG trade hit a high of $450 billion last year amid a surge in European demand, the International Energy Agency said.
However, global natural gas demand is set to slow in the coming years amid declining consumption in mature markets due to an “accelerated” roll-out of renewables and improved energy efficiency, the IEA said this month.
Demand is projected to grow by 1.6 per cent a year between 2022 and 2026, down from an average of 2.5 per cent a year between 2017 and 2021, the agency said in its Gas 2023 Medium-Term Market Report.
Meanwhile, global LNG capacity is expected to expand by 25 per cent from now until 2026, with the US consolidating its position as the world’s largest exporter of the supercooled fuel through the construction of liquefaction plants, the agency said.
Qatar, one of the world's largest LNG exporters, is looking to raise its production capacity to 126 million tonnes a year by 2027.
In June, QatarEnergy also entered into a 27-year agreement with China National Petroleum Corporation for the delivery of four million tonnes of LNG a year.
The company signed a similar deal with China Petroleum & Chemical Corporation, or Sinopec, last November.