Qatar and Shell signed a 27-year agreement to supply LNG to the Netherlands

Two long-term LNG agreements have been signed by QatarEnergy and Shell to supply LNG to the Netherlands for a period of 27 years, beginning in 2026, the year that Qatar is anticipated to see the completion of its first export expansion projects.

By signing a supply agreement with the Netherlands to supply 3.5 million metric tons of liquefied natural gas (LNG) annually for 27 years, Qatar has increased the amount of gas it has been supplying to Europe on a long-term basis.

Affiliates of QatarEnergy and Shell (SHEL.L) inked two LNG sale and purchase agreements on Wednesday, the company announced. This agreement is similar to the one that was made with TotalEnergies last week.

Starting in 2026, Qatari LNG will be transported to the Gate LNG terminal at the Port of Rotterdam as part of the enormous North Field LNG production expansion project.

The state-owned company in Qatar said on Wednesday that under the terms of the sale and purchase agreements, up to 3.5 million tons of LNG per year will be delivered by Qatar and Shell to the Gate LNG terminal in the port of Rotterdam.

In several of Qatar’s massive expansion initiatives, Shell is a minor partner. About the North Field East (NFE) and North Field South (NFS) expansion projects, the UK-based supermajor owns 6.25% and 9.375% of the shares, respectively.

“These agreements reaffirm Qatar’s commitment to help meet Europe’s energy demands and bolstering its energy security with a source known for its superior economic and environmental qualities,” said Saad Sherida Al-Kaabi, the Qatari Minister of State for Energy Affairs, who is also president and CEO of QatarEnergy.

The agreement with Shell, the largest LNG trader in the world, was reached just one week after QatarEnergy and TotalEnergies signed long-term LNG contracts that call for Qatar to supply up to 3.5 million tons of LNG annually to France starting in 2026.

Another significant LNG trader, TotalEnergies, is a minor partner in Qatar’s massive NFE and NFS LNG expansion projects.

The agreement signed last week with TotalEnergies marked QatarEnergy’s first 27-year contract for the supply of LNG to Europe. This agreement comes after comparable 27-year contracts with Sinopec, a Chinese company, and China National Petroleum Corporation (CNPC).

The North Field expansion project, which Qatar launched earlier this month, is the largest LNG project in the world and will increase the small Gulf nation’s export capacity by 48 million tons per year (mmtpa) by 2027.

“40% of all the new LNG that will come to the market by 2029, when all our projects are up and running, is going to be from QatarEnergy,” stated Al-Kaabi in July of this year.

In the North Field South project, Shell owns a 9.375% share, and in the North Field East project, 6.25%.

The agreement comes after a similar one between QatarEnergy and TotalEnergies last week, which was, up until that point, Qatar’s largest and longest agreement with Europe for gas supply.

Asia has so far outpaced Europe in securing supply from Qatar’s two-phase expansion plan, which will increase its liquefaction capacity from 77 million to 126 million metric tons annually by 2027. Asia is known for having a strong appetite for long-term sales and purchase agreements.

Over the past year, QatarEnergy has signed agreements to supply LNG from the expansion to Asian buyers in China and other locations.

Among the Asian agreements are two 27-year supply contracts: one with China’s Sinopec, signed in November of last year, for 4 million metric tons annually, and another with China National Petroleum Corporation (CNPC), signed in June.