Following Qatar’s recent signing of a declaration of intent on energy cooperation with Germany aimed at becoming its main supplier of liquefied natural gas (LNG) in the future, the emirate has now signed separate partnership with French TotalEnergies and Italian Eni for the US$30 billion North Field (or “Dome”) extension of the world’s largest LNG project. According to statements by Qatari Energy Minister Saad al-Kaabi, France’s oil and gas supermajor will hold a 25% stake in the project, with no other company having a higher stake and the selection process for partners are now finalized. The same conditions have been announced for the Eni partnership agreement. TotalEnergies chief executive Patrick Pouyanne added that the company’s 25% stake will be for a “train” (liquefaction and purification facility) of the project. Al-Kaabi confirmed that since Qatar has a unified approach, in which the four trains are considered as a single unit, TotalEnergies’ 25% stake in a virtual train gives it a stake of approximately 6.25% in all four trains. Overall, North Field’s long-awaited expansion plan includes six LNG trains that aim to increase Qatar’s liquefaction capacity from 77 million tonnes per annum (mtpa) to 110 mtpa, with the addition of four further trains starting in 2025, then to 126 million mtpa with the addition of two more trains by 2027. All other things being equal, this appears to be an entirely achievable target given that the gas field supergiant natural gas North Field, together with the neighboring 3,700 square kilometer area of Iran’s South Pars field, comprises by far the largest unassociated natural gas field in the world. According to conservative estimates, the entire 9,700 square kilometer site contains at least 1,800 trillion cubic feet (Tcf) of non-associated natural gas and at least 50 billion barrels of natural gas condensate. This abundant resource allowed Qatar for many years to be the world’s leading exporter of LNG, even if it lost this position for a time to Australia. Qatar’s loss of reputation was the product of the moratorium it imposed in 2005 on further development of the North Dome site, but this was later lifted in the first quarter of 2017.
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The fact that TotalEnergies and Eni were the first two international oil companies chosen for key roles in this key project may not only reflect their undoubted capabilities as oil and gas operations, but may also reflect the responsibility that Qatar imposes to position itself as the go-to emergency gas supplier for Europe, given the energy supply constraints likely to arise from its intention to ban Russian energy this year. Not only are the two companies highly valued and favored oil and gas companies in the European Union (EU), but they are also considered “our own companies, especially TotalEnergies”, as an insider said exclusively. leading energy in the EU. OilPrice.com Last week. “Germany is indeed the economic leader of the EU but France could be called its ideological leader, having pushed for the ‘Treaty of Paris’ in 1951, which can be seen as the precursor to the Community. European Economic and then the European Union itself,” he says. “TotalEnergies is seen by some senior members of the EU as sometimes fulfilling a role that overlaps the economic and political agendas, although this operates on a separate level of the company itself,” he told OilPrice.com. TotalEnergies also placed itself in a very advantageous position both from the perspective of Germany and Qatar by announcing very soon after the Russian invasion of Ukraine that he would no longer invest in any new projects in Russia.
For Qatar, striking supply deals in Europe in anticipation of the loss of at least some Russian oil (and gas) supplies in the future is a sound strategy to ensure that the political will and support funding for its North Field expansion project continues. completion in 2027. For approximately five years prior to the signing of these new agreements with TotalEnergies and Eni, state-owned QatarEnergy was waiting to finalize various partnership agreements, although it has stated that it could finance the entirety itself. of the project if necessary. Other international oil companies that have bid to be included in the four trains of the North Field East expansion and/or the other two trains involved in the second phase, the North Field South Expansion project, include ExxonMobil, Shell and ConocoPhillips, according to the EU energy source. Qatar sees an even split of buyers for LNG volumes from expansion projects, according to al-Kaabi, with Asian buyers expected to make up half of the market and European buyers the rest. With this in mind, QatarEnergy has awarded the engineering and construction contract for the North Field Expansion Project to a joint venture between Spain’s Tecnicas Reunidas and China’s Wison Group.
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In the shorter term, new LNG supplies from Qatar are expected to enter Germany through existing import routes complemented by new infrastructure approved by the German Bundestag on May 19. This includes the deployment of four floating LNG import facilities on its northern coast and two permanent land terminals, which are currently under development, according to the EU energy source. These plans will run in parallel with, but are expected to be completed much sooner than, plans for Qatar to also make significant LNG supplies available to Germany from the Golden Pass terminal on the Texas Gulf Coast. QatarEnergy owns a 70% stake in the Golden Pass terminal project, with ExxonMobil owning the rest. The estimated send-out capacity of the Golden Pass Terminal will be approximately 18 million metric tonnes per annum (mtpa) of LNG and the facility is expected to be operational in 2024.
That said, doubts remain about the extent to which Qatar’s LNG can replace the oil and gas that has historically flowed to the EU from Russia. As highlighted by OilPrice.com, last year, Germany imported 142 billion cubic meters (bcm) of gas in 2021, down 6.4% from 2020, or an average of around 12 bcm per month (although l actual month-to-month usage does not reflect this average arithmetic mean due to seasonal usage differences). As an indication, according to data from Independent Commodity Intelligence Services (ICIS), for the month of December 2021, natural gas from pipelines from Russia accounted for 32% of Germany’s total imports that month, followed by supplies from Norway (20% of the total) and the Netherlands (12% of the total). Using this December percentage yields a full year figure of just over 45 billion cubic meters of natural gas imported by Germany from Russia, which equates to just under 33 million metric tonnes of LNG, or just over 40 million tonnes of oil equivalent. The 33 million metric tons of LNG for the year for Germany alone from Russia compares to the Golden Pass total figure for the year of 18 million metric tons per year of LNG.
By Simon Watkins for Oilprice.com
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