Following the recent signing by Qatar of a declaration of intentions for energy cooperation with Germany to become its key supplier of liquefied natural gas (LNG) from now on, the Emirate has signed agreements Separate collaboration with TotalEnergies of France and Eni of Italy for US $ 30 billion (or ‘Dome’) Expansion of the world’s largest LNG project. According to Qatari Energy Minister Saad al-Kaabi, France’s oil and gas supermajor will have a 25 percent stake in the project, with no other company having a higher stake and the partner selection process it’s over. The same terms as Eni’s collaboration agreement have been announced. TotalEnergies CEO 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 because Qatar has a unified approach, in which all four trains are considered a unit, TotalEnergies ’25% stake in a virtual train gives it around a 6.25% stake in the four trains. Overall, the expected North Field expansion plan includes six LNG trains aimed at increasing Qatar’s liquefaction capacity from 77 million tonnes per year (mtpy) to 110 mtpy, with the addition of four more trains. from 2025 and then to 126. million tm / year with the addition of two more trains by 2027. All the same, it seems an eminently achievable goal, given that the supergiant natural gas field North Field, along with the The 3,700-square-kilometer neighboring area of Iran’s South Pars field comprises, by far, the world’s largest unassociated natural gas field. Conservatives estimate that the entire 9,700-square-kilometer site contains at least 1.8 trillion cubic feet (Tcf) of unassociated natural gas and at least 50 billion barrels of natural gas condensate. This abundant resource had allowed Qatar to be the world’s largest exporter of LNG for many years, although it lost that position for a time to Australia. Qatar’s loss of position had been the product of the moratorium it had imposed in 2005 on the further development of the North Dome site, but then lifted in the first quarter of 2017.
Related: 3 reasons why Goldman Sachs is wrong about lithium because TotalEnergies and Eni were the first two international oil companies chosen for key roles in this key project may not be just a reflection of their undoubted capabilities as operations but may also reflect Qatar’s responsibility to position itself as Europe’s emergency gas supplier, given the constraints on energy supply that are likely to stem from the planned ban on Russian energy this year. Both companies are not only highly valued and valued by the European Union (EU) oil and gas firms, but are also seen as “our own companies, especially TotalEnergies”, as an exclusive source told OilPrice. senior energy in the EU. like last week. “Germany is indeed the EU’s economic leader, but France could be called its ideological leader, having pushed for the ‘Treaty of Paris’ in 1951, which can be seen as the forerunner of the European Economic Community and then of the European Union. same, “he said. “Some senior EU members believe that TotalEnergies sometimes plays a role that is at the crossroads of economic and political agendas, although this works at a different level from the company itself,” he told OilPrice.com. TotalEnergies also took a very advantageous position from both the German and Qatar perspectives by announcing shortly after the Russian invasion of Ukraine that it would no longer invest in any new projects in Russia.
For Qatar, tying supply agreements to Europe in preparation for the loss of at least some Russian oil (and gas) supplies in the future is a solid strategy to ensure political will and financial support for its North Field expansion project continues to be completed in 2027. For about five years before signing these new agreements with TotalEnergies and Eni, the state-owned QatarEnergy had been waiting to finalize several collaboration agreements, although it has stated that he could finance the whole project if necessary. Other international oil companies that have been bidding to be included in the four North Field East expansion trains 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 a uniform division of buyers of LNG volumes from expansion projects, according to al-Kaabi, and Asian buyers are expected to account for half of the market and buyers in Europe the rest. In this regard, QatarEnergy awarded the contract for the acquisition and construction of engineering for the northern field expansion project to a joint venture between the Spanish Tecnicas Reunidas and the Chinese Wison Group.
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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 the new infrastructure approved by the German Bundestag on 19 May. This includes the deployment of four floating LNG import facilities on its north coast and two permanent ground terminals, which are currently under development, according to the EU energy source. These plans will work in parallel, but are likely to be completed much sooner, with plans for Qatar to also make major LNG supplies available to Germany from the Golden Pass terminal on the Texas Gulf Coast. QatarEnergy has a 70 percent stake in the Golden Pass terminal project, with ExxonMobil the rest. The estimated shipping capacity of the Golden Pass terminal will be about 18 million metric tons (mtpy) of LNG per year and the facility is expected to be operational by 2024.
That said, there are still doubts about the extent to which Qatar’s LNG can replace the oil and gas that has historically arrived in the EU from Russia. As OilPrice.com pointed out, last year Germany imported 142 billion cubic meters (bcm) of gas in 2021, 6.4 percent less than in 2020, an average of about 12 bcm per month (all and that actual month-to-month use would not reflect this). arithmetic mean due to different seasonal use). As a guide, according to the Independent Commodity Intelligence Services (ICIS), for December 2021, natural gas coming from pipelines from Russia accounted for 32 percent of total imports from Germany that month. of supplies from Norway (20 percent of the total) and the Netherlands (12 percent of the total). The use of this percentage in December gives a figure for the whole year of just over 45 billion cubic meters of natural gas that Germany imports from Russia, which is equivalent 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 is compared to the full Golden Pass figure for the year of 18 million metric tons of LNG per year.
By Simon Watkins for Oilprice.com
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