Qatar and Singapore Sign Gas Deal That Details Pollution

(Bloomberg) --

Qatar and Singapore signed the first long-term liquefied natural gas deal that details pollution from the fastest growing fossil fuel.

The accord is the latest sign of how the gas industry is focusing on getting cleaner. Even if the fuel is much less polluting than oil and coal, the sector is under increasing pressure to reduce emissions as nations are seeking to meet strict climate targets.

Each cargo delivered under the 10-year agreement between Qatar Petroleum’s trading arm and Pavilion Energy Pte will come with a statement of how much greenhouse gas emissions it caused. The accord covers as much as 1.8 million tons per year from 2023. There is no obligation for carbon offsets, but the intent is there to reduce emissions, Pavilion said.

“In the context of energy transition toward a low-carbon economy, this partnership is testament to the sustainability drive of both companies and the strong willingness of Pavilion Energy to pursue decarbonization and offset strategies,” Frederic Barnaud, the company’s chief executive officer, said at the signing.

Pavilion Energy in March launched a tender, asking bidders to commit to help develop a methodology to quantify and report emissions in the LNG industry.

The methodology that will be used should cover emissions from the well to the import terminal and transportation. Pavilion Energy expects it to become a standard in the industry that’s been lacking common and transparent practices of quantifying and disclosing emissions per cargo.

That would pave the way for carbon offsets through projects that help mitigate the carbon footprint, such as forest conservation or major renewable power generation, that would not have otherwise occurred.

For Qatar, which is seeking to expand its global LNG production, the deal will make it a major supplier to Singapore’s growing market. The pandemic, lower prices and a surplus of the fuel has made it harder for sellers to sign up buyers on long-term contracts.

This deal is a first achievement for QP Trading, a unit set up to build a global LNG portfolio that includes both equity and third-party volumes, said Saad Al-Kaabi, Qatar’s energy minister and CEO of Qatar Petroleum, at the signing ceremony.

Doha-based QP Trading will manage the price risk exposure of its portfolio through physical and derivatives trading, Qatar Petroleum said in a statement. The company hired Arnaud Dubois-Denis as global head of LNG trading to build trading operations for the gas giant.

Pavilion declined to comment on pricing terms.

“This agreement reflects our commitment to respond to the needs of our customers, and to ensure supply security, price competitiveness and flexibility,” said Al-Kaabi. It “also constitutes an important step in reaffirming LNG’s critical economic and environmental factors and its strong role in the energy transition.”

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