TotalEnergies has successfully won a stake in a multi-billion dollar project to boost Qatar’s gas exports, costing almost $29 billion.
The project will expand Qatar’s annual capacity to 110 million tonnes by 2026 from 77 million tonnes. TotalEnergies will get a 6.25 per cent equity stake in the first phase of the plan, state producer Qatar Energy said on Sunday, June 12, 2022.
Known as North Field East, the project will include the construction of four LNG liquefaction units, or trains. TotalEnergies will own 25 per cent of a joint venture with Qatar Energy, with the venture in turn holding 25 per cent of North Field East.
Another partner will be announced later this week, Saad Al Kaabi, Qatar’s Energy Minister and head of Qatar Energy, according to media reports. Exxon Mobil and ConocoPhillips are also poised to win stakes, Bloomberg reported last week, while Shell Plc placed a bid.
“Suddenly, because of the tragic events in Europe, everybody is rushing to get LNG,” TotalEnergies CEO Patrick Pouyanne said, adding that “appetite is strong.”
The close to three-year negotiations went on “a little long, to be honest”, Pouyanne said, without disclosing how much TotalEnergies will invest. The Energy Minister and his team were “very good defenders of Qatari interests in this process”.
Deal to strengthen Europe’s Energy Security
Kaabi previously said Qatar Energy might look for investments to fund around 30 per cent of the expansion. The country received bids for double the equity on offer, he said on Sunday. No company will get a stake larger than that of TotalEnergies, he said.
Pouyanne said the deal would strengthen Europe’s energy security and aid the continent’s long-term goal of using less coal and oil. While gas emits carbon when burned and methane leaks are common in the industry, it’s a cleaner fossil fuel.
“It is good news for the fight against climate change as gas and LNG are key to support the energy transition,” Pouyanne said.
Qatar Energy has started drilling development wells for the North Field East project. It chose Chiyoda Corp. of Japan and London-based TechnipFMC Plc to do the main construction work.
Kaabi, the energy minister, said Qatar would announce partners for a separate expansion, known as North Field South, by the end of the year. That project will increase the country’s LNG capacity to 126 million tonnes a year, and won’t be finished until 2027.
Most of Qatar’s gas is contained in the North Field, an offshore behemoth extending into Iranian waters. The shallow waters and many reserves mean Qatar can pump gas more cheaply than just about any other country.
Meanwhile, Qatar is considering further expansion plans due to the sheer demand for LNG in the wake of the Ukrainian conflict, Bloomberg has reported.
