In late June, China’s state-run Sinopec and China National Petroleum Corporation (CNPC) signed deals with QatarEnergy to take four million tons per year of liquefied natural gas (LNG) for 27 years, the longest LNG agreements to date. China is the world’s second-largest LNG buyer, after Japan. Then, last week, Berkshire Hathaway Energy agreed to purchase a 50 percent stake in Maryland’s Cove Point LNG facility for $3.3 billion in cash, bringing the company’s ownership share in the facility to 75 percent. The Cove Point LNG Terminal has a storage capacity of 14.6 billion cubic feet and a daily send-out capacity of 1.8 billion cubic feet. The firm has a longterm contract with Sumitomo Corp., a Japanese trading company in which Warren Buffett is also invested.
Each of these investments reflects a larger context that is driving global long term energy demand toward LNG in an attempt to secure critical resources. Countries are attempting to lock up long-term deals for all the resources they need – both for emerging technologies and to ensure a greener, more sustainable future – while companies are increasing capacity so that they can meet that growing demand. Like rare earths and other “critical and strategic minerals,” LNG has moved into a sweet spot.