PetroChina Company Limited PTR recently inked a 22-year agreement with Qatargas Operating Company to purchase 3.4 million tons of liquified natural gas annually. The deal, which comes amid the brewing tension between United States and China, along with soaring Chinese LNG demand, marks PetroChina's biggest contract in terms of annual volumes.
Per the deal, Qatargas will supply LNG from Qatargas 2 project, which is a joint venture between Qatar Petroleum, Exxon Mobil Corporation XOM
and Total S.A. TOT
. The first cargo is expected to be delivered later this month.
Considering the secular shift to cleaner burning fuel for power generation, China has overtaken South Korea as the world's second-biggest buyer of LNG, being just behind Taiwan. The use of coal for heating purposes is expected to go down, per China's pollution control measures. This will give a boost to the country's LNG demand in the coming years. Reportedly, China's LNG imports are likely to surge 70% to around 65 million tons by 2020. By 2030, China is believed to become the largest LNG importer.
With China's imposition of a 25% tariff on LNG imports from the United States in August, PetroChina is considering to secure LNG supply from other nations. Notably, Qatargas holds the topmost position among the LNG-producing companies in the world, with an annual output of around 77 million tons. Also, with China emerging as one of the world's largest gas markets, the 22-year deal ending in 2040 is likely to bolster the long-term ties between PetroChina and Qatargas. Zacks Rank and A Key Pick
PetroChina currently carries a Zacks Rank #3 (Hold).
PetroChina Company Limited Price
PetroChina Company Limited Price | PetroChina Company Limited Quote
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report McDermott International, Inc. (MDR): Free Stock Analysis Report Exxon Mobil Corporation (XOM): Free Stock Analysis Report PetroChina Company Limited (PTR): Free Stock Analysis Report TOTAL S.A. (TOT): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research