• 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
  • 5 days The United States produced more crude oil than any nation, at any time.
  • 10 days e-truck insanity
  • 9 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 5 days How Far Have We Really Gotten With Alternative Energy
  • 8 days James Corbett Interviews Irina Slav of OILPRICE.COM - "Burn, Hollywood, Burn!" - The Corbett Report
  • 9 days The European Union is exceptional in its political divide. Examples are apparent in Hungary, Slovakia, Sweden, Netherlands, Belarus, Ireland, etc.
  • 10 days Biden's $2 trillion Plan for Insfrastructure and Jobs
  • 10 days "What’s In Store For Europe In 2023?" By the CIA (aka RFE/RL as a ruse to deceive readers)
Europe Still Addicted To Russian LNG

Europe Still Addicted To Russian LNG

The fact that neither pipeline…

Argentina Taps Waste Gas To Mine Bitcoin

Argentina Taps Waste Gas To Mine Bitcoin

Crypto companies are tapping into…

Could AI Spark a Boom in Natural Gas Demand?

Could AI Spark a Boom in Natural Gas Demand?

The burgeoning power demands of…

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 Plays It Safe With First Contract For Huge North Dome Gasfield

Doha Qatar

Following its loss of the world’s number one liquefied natural gas (LNG) exporter position to Australia in January, Qatar announced a new output target of 126 million tons per year (mtpy) by 2027, a huge jump from its current capacity of around 77 mtpy.

This superseded the longstanding target of 110 mtpy, although this remains an interim target for Q4 2025. This is in line with the discovery of further productive layers of gas deposits attached to the main North Dome (also known as ‘North Field’) site but located about 12 kilometres onshore from the coast onshore in Ras Laffan. Given its perilous position in the Middle East - directly between Saudi Arabia on its west and Iran on its east – the awarding of contracts to achieve this output increase was being watched by both countries and their chief superpower sponsors (the U.S., and China, respectively) as an indication of Qatar’s political intentions. Qatar’s first award for the new North Dome contracts played it safe, with Spain’s Técnicas Reunidas winning a major engineering, procurement, and construction (EPC) deal, but future contracts may well be more controversial.

The 6,000 square kilometre North Dome site – together with the 3,700 square kilometre area of Iran’s South Pars field – comprise by far the largest non-associated natural gas field in the world. By conservative estimates the entire 9,700 square kilometre site holds at least 1,800 trillion cubic feet of non-associated natural gas and at least 50 billion barrels of natural gas condensates. From 2005 until the end of the first quarter of 2017 Qatar placed a moratorium on further development of the North Dome in order to conserve its principal hydrocarbons (and indeed financial) resource but the resolve to continue with this self-imposed prohibition was finally removed for two key reasons.

Related: The Future Of Oil Is Offshore

First, it was clear to Qatar that competition in the LNG export field was going to become a lot more intense, especially from Australia. Second, it was increasingly clear that although this moratorium did limit Qatar’s development of the site, it only acted as an accelerator on Iran’s development of its side of the 9,700 square kilometre site, prompting frequent complaints from Doha that its neighbour’s no-holds-barred development of its South Pars site would damage the future recovery rate in Qatar’s own North Dome.  Given the sheer scale of the gas resource in play, it was little surprise that many international oil companies wanted to be a part of it when it was announced that up to a 30 per cent stake in the North Dome expansion project may be up for grabs in one or more tranches, with the last of the successful bidders to be announced by the end of this year. Broadly U.S.-aligned side came interest from, among others, Anglo-Dutch group Royal Dutch Shell, Italy’s Eni, France’s Total Energies, and the U.S.’s own ConocoPhillips, ExxonMobil, and Chevron. On the China-Russia side came expressions of interest from government levels indicating a range of possible companies that wished to take part. China, in particular, stressed to Qatar that under the terms of its landmark 25-year deal signed with Iran in 2019, it would be expanding its footprint across all of the Islamic Republic’s oil and gas assets, including the supergiant South Pars non-associated gas field that forms the other part of the reservoir on which North Dome sits. 

These points echoed the messaging carried in a series of meetings that occurred between senior figures from Iran’s Petroleum Ministry and Qatar’s Energy Ministry aimed at drawing up a new North Dome-South Pars joint development plan following the U.S.’s unilateral withdrawal from the Joint Comprehensive Plan of Action (JCPOA) – ‘nuclear deal’ – in the middle of 2018.

These meetings covered two main areas, a senior source who works closely with Iran’s Petroleum Ministry told OilPrice.com. “First, Iran agreed to stop the aggressive recovery tactics that it had been using along the border areas [demarcating South Pars and North Dome] and second Qatar agreed to sit down with the Chinese and the Russians to discuss the future co-ordination of gas export destinations for Iranian, Qatari and Russian gas flows, marketing and pricing,” he said. “At that time, Iran and China were talking about expanding the scope of the previously agreed 25-year deal between them and Russia was keen to ensure the smooth continuation of its own gas supplies to China [principally via the US$400 billion 30-year deal agreed in May 2014] and to ensure that Iranian gas did not take the place of Russian gas – and influence – in Europe,” he added. “One of the core elements that was agreed at these meetings was that Iran would not continue with developments on its side of the reservoir in South Pars that might damage the Qatari gas take from its North Dome field, leaving Qatar free to increase its LNG export volumes with a guaranteed buyer in China, and Iran in the meantime would receive assistance as and when required from Qatar on building out its own LNG capabilities,” he underlined.

Related: Carbon Capture Could Dramatically Improve The LNG Outlook

The U.S. had long sought to stymie such closer ties between Qatar, Iran, and Russia, given that any sort of co-operation alliance between the three would create an extremely powerful gas cartel – effectively a ‘Gas OPEC’. The genesis for this alliance was already in place with the Gas Exporting Countries Forum (GECF) – of which Qatar, Iran, and Russia were the three founding members in 2001 – comprising 11 of the world’s leading natural gas producers (Algeria, Bolivia, Egypt, Equatorial Guinea, Iran, Libya, Nigeria, Qatar, Russia, Trinidad & Tobago, and Venezuela). Aside from the fact that the core members of the organisation were Russia, Iran and Qatar, and that it also has some of the U.S.’s other rogue states of note on the list – notably Venezuela – GECF members together control over 70 per cent of the world’s natural gas reserves, 38 per cent of the pipeline trade and 85 per cent of the LNG production. 

The U.S., therefore, has eyed any Qatari gas deals with keen interest ever since, and was extremely privately critical of the recent deal between Doha and Beijing involving the signing of a 10-year purchase and sales agreement by the China Petroleum & Chemical Corp. (Sinopec) and Qatar Petroleum (QP) for 2 mtpy of LNG. This was shortly followed by a similarly abhorrent deal from the U.S. perspective between Qatar and the increasingly overtly pro-Iranian Pakistan government. This 10-year sale and purchase for Qatar Petroleum to supply the Pakistan State Oil Company with up to 3 mtpy of LNG to various ports in the country begins in 2022 and builds on the earlier deal signed in 2016 for Qatar to supply Pakistan with 3.75 mtpy of LNG. Pakistan’s prime minister, Imran Khan, has stated since then that he is personally in favour of the game-changing Iran-Pakistan Pipeline (IPP) and has made it a priority project. 

For China, these deals align into its broader plans to integrate the IPP into the US$50 billion-plus China Pakistan Economic Corridor (CPEC) project, with Gwadar earmarked to be a key logistical node in its multi-generational power-grab project, ‘One Belt, One Road’. Beijing also wants to keep Iran as one of its key suppliers of oil and gas for the long term and it further regards supporting those countries who the U.S. opposes as being a central plank of its foreign policy. This is part of China’s recent shift in stance to assert itself more aggressively in the Asia-Pacific region while the U.S. moves from the ‘constructive engagement’ of the Clinton, Bush and Obama administrations to regarding China as a strategic competitor. Russia, meanwhile, sees the IPP as offering surrounding countries a viable alternative to the long-awaited and U.S.-backed Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline. A pipeline for Iranian gas, and later oil, running through Central Asia remains a core strategy for Russia to exert its influence in the Middle East, and to consolidate its presence in central and eastern Europe to the one side and Asia to the other. 


By Simon Watkins for Oilprice.com

More Top Reads From Oilprice.com:

Download The Free Oilprice App Today

Back to homepage

Leave a comment

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