• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 8 days The United States produced more crude oil than any nation, at any time.
  • 20 hours Could Someone Give Me Insights on the Future of Renewable Energy?
  • 6 hours How Far Have We Really Gotten With Alternative Energy
  • 1 hour Bankruptcy in the Industry
Uzbekistan's Natural Gas Crunch Squeezes State Coffers

Uzbekistan's Natural Gas Crunch Squeezes State Coffers

Uzbekistan, once a gas exporter,…

Gas Glut? Not for Long.

Gas Glut? Not for Long.

Low prices invariably stimulate stronger…

Simon Watkins

Simon Watkins

Simon Watkins is a former senior FX trader and salesman, financial journalist, and best-selling author. He was Head of Forex Institutional Sales and Trading for…

More Info

Premium Content

Qatar Expands LNG Capacity To Become Europe’s Emergency Gas Supplier

  • Qatar signed massive deals with TotalEnergies and Eni for the expansion of the world’s biggest LNG project.
  • The North Field Expansion plan includes six LNG trains that will raise Qatar’s liquefaction capacity to 110 mtpy.
  • Qatar is positioning itself as the ‘go-to’ emergency gas supplier for Europe.

Following on from the recent signing by Qatar of a declaration of intent on energy cooperation with Germany aimed at becoming its key supplier of liquefied natural gas (LNG) going forward, the Emirate has now signed separate partnership deals with France’s TotalEnergies and Italy’s Eni for the US$30 billion North Field (or ‘Dome’) Expansion of the world’s biggest LNG project. According to statements from Qatar’s Energy Minister, Saad al-Kaabi, the French oil and gas supermajor will have a 25 percent stake in the project, with no other company to have a higher stake and the selection process for partners now finalised. The same terms have been announced the Eni partnership deal. TotalEnergies’ chief executive officer, Patrick Pouyanne, added that the company’s 25 percent stake will be for one ‘train’ (liquefaction and purification facility) of the project. Al-Kaabi confirmed that as Qatar has a unified approach, in which all four trains are considered to be one unit, TotalEnergies’ 25 percent stake in one virtual train gives it around a 6.25 percent holding in the whole four trains. Overall, the long-awaited North Field Expansion plan includes six LNG trains that are aimed at increasing Qatar’s liquefaction capacity up from 77 million tonnes per year (mtpy) to 110 mtpy, with the addition of four more trains from 2025, and then to 126 million mtpy with the addition of two further trains by 2027. All things remaining equal, this looks like an eminently achievable objective, given that the supergiant North Field natural gas field, together with the neighbouring 3,700 square kilometre area of Iran’s South Pars field, comprises by far the largest non-associated natural gas field in the world. By conservatives estimates the entire 9,700 square kilometre site holds at least 1,800 trillion cubic feet (Tcf) of non-associated natural gas and at least 50 billion barrels of natural gas condensates. This abundant resource had allowed Qatar for many years to be the number LNG exporter in the world, although it did lose that spot for a time to Australia. Qatar’s loss of standing had been a product of the moratorium it had imposed in 2005 on the further development of the North Dome site but this was then lifted in the first quarter of 2017. 

Related: 3 Reasons Goldman Sachs Is Wrong About Lithium
That TotalEnergies and Eni were the first two international oil companies chosen for key roles in this key project may not just be a reflection of their undoubted capabilities as oil and gas operations, but may also reflect the onus that Qatar is placing on positioning itself as the ‘go-to’ emergency gas supplier for Europe, given the energy supply constraints that are likely to arise from its intended ban on Russian energy this year. Not only are both companies very highly regarded and well-favoured oil and gas firms by the European Union (E.U.) but they are also seen as “our own firms, particularly TotalEnergies,” as a senior energy source in the E.U. exclusively told OilPrice.com last week. “Germany is effectively the economic leader of the E.U. but France could be termed the ideological leader of it, having pushed for the ‘Treaty of Paris’ in 1951, which can be seen as the precursor to the European Economic Community and then the European Union itself,’ he said. “TotalEnergies is seen by some senior members of the E.U. as sometimes fulfilling a role that straddles both economic and political agendas, although this operates on a level distinct from the company itself,” he told OilPrice.com. TotalEnergies also put itself in a very advantageous position from both Germany’s and Qatar’s perspectives by announcing early on after the Russian invasion of Ukraine that it would no longer be investing in any new project in Russia. 

For Qatar, tying up supply deals in Europe in preparation for the loss of at least some Russian oil (and gas) supplies in the future is a sound strategy for ensuring that the political will and financial backing for its North Field Expansion project continues to its completion in 2027. For around five years before these new deals were signed with TotalEnergies and Eni, state-run QatarEnergy had been waiting to finalise various partnership agreements, although it has stated that it could finance the entire project itself if required. Other international oil companies that have been bidding for inclusion in the four trains of the North Field East Expansion and/or the other two trains involved in the second phase, North Field South Expansion project, include ExxonMobil, Shell, and ConocoPhillips, according to the E.U. energy source. Qatar sees an even split of buyers for the LNG volumes from the expansion projects, according to al-Kaabi, with Asian buyers expected to make up half the market and buyers in Europe the rest. In this vein, QatarEnergy awarded the engineering procurement and construction contract for the North Field Expansion project to a joint venture between Spain’s Tecnicas Reunidas and China’s Wison Group.

Related: Iraq Wants To Buy Exxon’s Stake In Key Oil Field

In the shorter-term, the plan is that new LNG supplies from Qatar would come into Germany through existing importation routes augmented by new infrastructure approved by the German Bundestag on 19 May. This includes the deployment of four floating LNG import facilities on its northern coast, and two permanent onshore terminals, which are currently under development, according to the E.U. energy source. These plans will run in parallel with, but are likely to be finished significantly sooner than, plans for Qatar to also make available to Germany sizeable supplies of LNG from the Golden Pass terminal on the Gulf Coast of Texas. QatarEnergy holds a 70 percent stake in the Golden Pass terminal project, with ExxonMobil holding the remainder. The Golden Pass terminal’s estimated send out capacity will be around 18 million metric tons per year (mtpy) of LNG and the facility is expected to be operational in 2024.

This said, there remain doubts over the degree to which Qatar’s LNG can replace the oil and gas that has historically flowed into the E.U. from Russia. As highlighted by OilPrice.com, last year Germany imported 142 billion cubic metres (bcm) of gas in 2021, down 6.4 percent from 2020, an average of around 12 bcm per month (although real month-by-month use would not reflect this arithmetical mean average due to differing seasonal usage). As a guide, according to data from Independent Commodity Intelligence Services (ICIS), for the month of December 2021, natural gas coming via pipelines from Russia amounted to 32 percent of Germany’s total imports that month, followed by supplies from Norway (20 percent of the total) and the Netherlands (12 percent of the total). Using this December percentage gives a figure for the entire year of just over 45 billion cubic metres of natural gas being imported by Germany from Russia, which equates to just under 33 million metric tons of LNG, or just over 40 million tons of oil equivalent. The 33 million metric tons of LNG for the year for Germany alone from Russia compares to the entire Golden Pass figure over the year of 18 million metric tons per year of LNG. 

By Simon Watkins for Oilprice.com

More Top Reads From Oilprice.com:

Download The Free Oilprice App Today

Back to homepage

Leave a comment
  • Carlos Everett on June 21 2022 said:
    Germany has Angela Merkel to thank for all of this. She was warned by so many people it boggles the mind. This was such a terrible business decision, that it makes you think, there could have been major league corruption at play.

    At a bare minimun she will be compared to Germany's famous leader of the 1930-45 era, because make no mistake, if Germany faces a winter like the allied soldiers faced at the Battle of the Bulge in 1944, there are going to be so many deaths in Germany just because they cannot keep their houses warm. Ask the families of the 57 people who died in the state of Texas because the electric grid went out in 2021. What happens to Germany and the rest of Europe is going to be staggering!!

    Why Angela Merkel was not asking the simple question of what happens if Russia invades the EU and what does it do to prices? Any normal person would be silly not to ask this question. Why is she not being prosecuted for not protecting the 1949 constitution or the State of Germany.

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News