Qatar expands LNG capacity to become Europe’s emergency gas supplier

Following Qatar’s recent signing of a declaration of intent for energy cooperation with Germany, with the aim of becoming its main supplier of liquefied natural gas (LNG), the Emirate has signed separate partnership agreements with France’s TotalEnergies and Italy’s Eni for the $30 billion Campo Norte (or ‘Dome’) expansion of the world’s largest LNG project. According to statements by Qatari Energy Minister Saad al-Kaabi, the French oil and gas supermajor will have a 25% stake in the project, with no other company having a larger stake and the partner selection process is already underway. finished. In the same terms, the partnership agreement with Eni was announced. TotalEnergies CEO Patrick Pouyanne added that the company’s 25% stake will go towards a ‘train’ (liquefaction and purification facility) project. Al-Kaabi confirmed that as Qatar has a unified approach, in which all four trains are considered one unit, TotalEnergies’ 25% stake in a virtual train gives about 6.25% in the four trains. Overall, the long-awaited North Field 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 a further four trains from 2025 and then to 126 million mtpa with the addition of two more trains by 2027. Other things being equal, this seems an eminently achievable goal given that the Campo Norte supergiant natural gas field, along with the neighboring 3,700 square kilometer area of ​​the Iran’s South Pars field comprises by far the largest unassociated natural gas field in the world. By conservative estimates, the entire 9,700 square kilometer site contains at least 1,800 trillion cubic feet (Tcf) of unassociated natural gas and at least 50 billion barrels of natural gas condensate. This abundant resource allowed Qatar for many years to be the largest exporter of LNG in the world, although it lost that place for a while to Australia. Qatar’s loss of standing was a product of the moratorium it had imposed in 2005 on the development of the North Dome site, but this was suspended 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 be a reflection of their undoubted capabilities as oil and gas operations, but may also reflect the burden that Qatar is putting into positioning itself as the ‘go-to’ emergency gas supplier to Europe, given the power supply constraints likely to arise from its intended ban on Russian energy this year. The two companies are not only highly regarded oil and gas companies favored by the European Union (EU), but are also seen as “our own companies, particularly TotalEnergies”, as a senior energy source in the EU exclusively said. Last week. “Germany is effectively the economic leader of the EU, but France can be called the ideological leader, having pushed through the ‘Treaty of Paris’ in 1951, which can be seen as the precursor of the European Economic Community and later the European Union. itself,’ he said. “TotalEnergies is seen by some senior EU members as at times fulfilling a role that spans both economic and political agendas, although this operates at a level distinct from the company itself,” he told TotalEnergies also placed itself in a very advantageous position from the point of view of Germany and Qatar by announcing shortly after the Russian invasion of Ukraine that it would no longer be investing in any new projects in Russia.

For Qatar, closing supply deals in Europe in preparation for the loss of at least some Russian oil (and gas) supplies in the future is a solid strategy to ensure that political will and financial support for its Field Expansion project North continue completion in 2027. For about five years before these new deals were signed with TotalEnergies and Eni, state-owned QatarEnergy had been waiting to finalize several partnership deals, although it stated that it could fund the entire project if needed. Other international oil companies that are bidding for inclusion in the four trains of the Campo Norte Leste Expansion and/or the other two trains involved in the second phase, Campo Norte Sul Expansion project, include ExxonMobil, Shell and ConocoPhillips, according to the energy source. of the EU. Qatar sees a balanced split of buyers for LNG volumes from expansion projects, according to al-Kaabi, with Asian buyers expected to represent half of the market and European buyers the remainder. In this regard, QatarEnergy awarded the contract for the acquisition and construction of engineering for the Campo Norte Expansion project to a joint venture between Tecnicas Reunidas from Spain and Grupo Wison from China.

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In the short term, the plan is for new LNG supplies from Qatar to reach Germany via existing import 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 EU power source. These plans will run in parallel, but will likely be completed significantly earlier than plans for Qatar to also make sizable supplies of LNG available to Germany from the Golden Pass terminal on the Texas Gulf Coast. QatarEnergy holds a 70% stake in the Golden Pass terminal project, with ExxonMobil holding the remainder. The estimated shipping capacity of the Golden Pass terminal will be around 18 million metric tons per year (mtpa) of LNG and the facility is expected to be operational in 2024.

That said, questions remain about the degree to which Qatar’s LNG can replace the oil and gas that historically flowed into the EU from Russia. As featured by OilPrice.comLast year, Germany imported 142 billion cubic meters (bcm) of gas in 2021, down 6.4% from 2020, an average of around 12 bcm per month (although actual month-to-month usage does not reflect this arithmetic mean due to seasonal usage differences). As a guide, according to data from the Independent Commodity Intelligence Services (ICIS), for the month of December 2021, natural gas from Russian pipelines accounted for 32% of Germany’s total imports that month, followed by supplies from Norway ( 20% of the total). the total) and the Netherlands (12 percent of the total). Using this percentage from December gives a full-year figure of just over 45 billion cubic meters 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 year-over-year value of 18 million metric tons per year of LNG.

By Simon Watkins for

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