Two Qatari companies announced plans to finance a $5B expansion in LNG and retail gasoline for the Chinese Shandong Dongming Petrochemical Group. Plans include the construction of a new LNG receiving terminal and the storage facility to accommodate the 3 million metric tons/year increase in capacity. The injection will also finance 1,000 new gasoline filling stations in six provinces south of Beijing. The announcement follows the Qatari sovereign wealth fund’s commitment to invest as much as $20B in Asia by 2020.
China is home to nearly 50% more shale fields than the US. Many of these shale fields lay in remote Western China and will require massive investment before they can be efficiently tapped. Foreign countries, such as Qatar, invest in these projects because China is also the world’s largest energy consumer. The proliferation of drivers in China has produced a consequent high demand for fuel and gas stations. By investing in Chinese LNG companies, fuel-exporting countries like Qatar minimize transportation costs from well-to-station and increase margins. With global natural gas prices low, LGN companies can capitalize on opportunities to expand and exploit the growing Chinese demand for gas.