the relationship between Qatar and china: lng and beyond
LNG revenues from Asia are a great revenue generator, but the relationships with major LNG purchasers are also allowing Qatar to diversify its investment base. In May 2014, Qatari imports of Chinese products reached over USD 247 million, 10.3 percent of the country’s imports for the month. “A large chunk of the money China sends to Qatar in exchange for gas finds its way back to the Middle Kingdom; the Gulf country’s sovereign wealth fund received special permission as a foreign entity in 2012 to invest in China’s capital markets,” explains Gao Youzhen, Chinese ambassador to Qatar. “Qatar invests heavily in Chinese banks and the stock market.”
In order to capitalize on the internationalization of the Chinese Renminbi (RMB), an agreement between the Qatar Central Bank (QCB) and People’s Bank of China (PBC) was renewed in April 2014 that allows the QCB access to onshore Chinese interbank markets, in order to purchase bonds for Qatar’s foreign exchange reserves.
In 2013, Qatar and China signed agreements on trade, investment, aviation transport and the establishment of the China-Qatar Investment Co-operation Committee. In 2012, (bilateral trade volume) totalled USD 8.45 billion.
Meanwhile, Qatar’s natural resources offer excellent opportunities for Chinese companies to build both revenues and expertise. “For instance, two major Chinese companies – PetroChina and China National Offshore Oil Corporation – are engaged in the exploration of natural gas in Qatar,” says Youzhen. “Another example: in 2010, Qatar Petroleum signed a deal with PetroChina and Shell to explore and produce an 8,100km2 gas field near Ras Laffan. A year later, the three companies entered into an agreement to build a petrochemical and refining complex in Zhejiang province in east China.” Qatar’s LNG exports to China grew from 5 Mmtpa in 2012 to 6.8 Mmtpa in 2013, part of the growing demand for LNG in Asian markets, 8.7 percent of all Qatar’s LNG exports.
Article by Karim Meggaro