Opinion

China and the gas cartel

photo_camera china-xi-jinping-mohamed-bin-salman-qatar-golfo-gas-petroleo-oriente-medio

Qatar is a petro-monarchy located in the east of the Arabian Peninsula in the Gulf, whose desert soil has gigantic oil and gas reserves. Because of these immense energy riches, it is the fourth richest country in the world with a per capita income of $112,789, behind only Luxembourg, Ireland and Singapore.

In fact, Qatar is at the centre of two major economic and political events on a global scale. The first is the hosting of the World Cup, an event that has not been free of bribery scandals. The second is the gas agreement that has just been signed with China, through the companies Qatar Energy and Sinopec, for the supply of 108 million tonnes of liquefied natural gas (LNG) for 27 years. This is the largest and most important liquefied gas supply agreement signed on a global scale to date, and marks a turning point in the world's energy landscape.

On the other hand, he will be the protagonist of another major political event that will take place in the region after the World Cup and that will unleash a real political earthquake at the international level. Chinese President Xi Jinping's planned visit to Saudi Arabia and the meeting he has scheduled with the six petro-monarchies of the Gulf: Saudi Arabia, Bahrain, United Arab Emirates, Kuwait, Oman and Qatar. 

This visit will be transcendental in global energy geopolitics, given that the region is home to the world's largest oil and gas reserves. Added to this are the interests of countries such as Saudi Arabia, Turkey and Egypt in joining the BRICS geo-economic bloc. 

British analyst Alastair Crooke, director of the Beirut-based Conflict Forum, points out that the Chinese president's trip to Riyadh will be to seal the details of Saudi Arabia's accession to the BRICS and to agree on the terms of an oil deal with the Saudi kingdom. In his view, the meeting between the Chinese president and the Saudi crown prince will be "the end of the petrodollar system, because whatever is agreed in terms of how the Chinese pay for oil will be based on Russian-Chinese plans to move Eurasia to a new non-dollar trading currency". In other words, it will be the end of the petrodollar and the birth of the petroyuan.

It is clear that Xi Jinping's meeting with the six Gulf petro-monarchies will move the global energy chessboard. In Crooke's opinion, "when Turkey decided to join Russia in developing a large gas distribution centre on its territory and to participate in oil and gas investment and cooperation agreements with Russia and Iran, these are events that mark a strategic axis in the Middle East, both in energy and monetary terms in Eurasia". He explains that 'US allies such as Saudi Arabia, Turkey, the United Arab Emirates, India, South Africa, Egypt and groupings such as OPEC+ are taking a big step towards autonomy and the merging of non-Western nations into a coherent bloc that acts in their interests' and not those of the US and the EU.

Russia, Iran and Qatar have the world's largest gas reserves and have signed energy deals aimed at consolidating global leadership in the gas sector. Russia's Gazprom signed a $40bn gas deal with the National Iranian Oil Company (NIOC) and Qatar and Iran since 2017 have signed several partnership agreements to exploit the shared North Field gas reserves. These pacts are decisive steps towards greater control of the global gas market. Russia, Iran and Qatar are founders of the Gas Exporting Countries Forum (GECF), which includes Algeria, Bolivia, Egypt, Equatorial Guinea, Libya, Nigeria, Trinidad and Tobago and Venezuela, with Angola, Iraq, Norway, United Arab Emirates, Malaysia, Azerbaijan, Turkmenistan, Mozambique, Senegal and Tanzania as observers. Four days before Russia invaded Ukraine, the members of this Forum, which holds 71% of global gas reserves, met in Qatar. Their bet is on the creation of a powerful gas cartel, while India and China, with their agreements, purchases and storage, are consolidating their position as major resellers of gas and oil on a global scale.
 
@j15mosquera