State-owned Qatar Petroleum (QP) is moving ahead with the largest liquefied natural gas (LNG) export project ever to be sanctioned, staking a claim to the world’s projected future demand.
QP announced a positive final investment decision (FID) Monday for the North Field East (NFE) Project, which has been in the works for years and would produce 33 million metric tons/year (mmty). The project would boost Qatar’s overall LNG production capacity to 110 mmty from 77 mmty. The new facilities would receive 6 Bcf/d from the North Field, considered the world’s largest non-associated gas field. Qatar is already the world’s largest LNG exporter.
The NFE project is expected to cost $28.75 billion.
CEO Saad Sherida Al-Kaabi said QP is in discussions with other energy majors to take a stake in the project as they have in the country’s other LNG trains over the years. The FID comes at a time when sanctioning export projects of any size has been rare given a LNG supply glut that’s plagued the market in recent years and the pandemic’s economic fallout.
“This event is of particular importance as it comes at a critical time when the world is still reeling from the effects of a global pandemic and related depressed economies,” he said. “This investment decision is a clear demonstration of the steadfast commitment by the state of Qatar to supply the world with the clean energy it needs.”
QP awarded the engineering, procurement and construction (EPC) contract to a joint venture of Chiyoda Corp. and Technip Energies. Chiyoda has built 12 of Qatar’s 14 existing LNG trains.
The EPC award covers four mega liquefaction trains each with a capacity of 8 mmty, associated utility facilities and a carbon capture and sequestration (CCS) facility to cut greenhouse gas emissions (GHG) from the export terminal by 25% compared to similar plants, Chiyoda said.
Al-Kaabi said the CCS system would be the largest of its kind in the LNG industry. The project would also tap solar power, utilize a boil-off gas recovery system to limit GHG emissions, as well as conserve water and cut nitrogen oxide emissions. The measures come as buyers and the countries they serve are increasingly demanding responsibly produced and delivered LNG.
The cost of feed gas would be offset in part by condensate, propane, ethane, sulfur and helium production. “At a long-term breakeven price of just over $4.00/MMBtu, it’s right at the bottom of the global LNG cost curve, alongside Arctic Russian projects,” said Wood Mackenzie research director Giles Farrer.
The project could begin LNG production in 4Q2025. The NFE project is the first phase of a broader plan to further increase Qatar LNG production to 126 mmty from 110 mmty. The second phase, North Field South Project, would involve constructing two more mega liquefaction trains each with the capacity of 8 mmty. Production in the South Project could begin in 2027.
Qatar has been dominant in the global LNG trade for decades. According to Kpler, about two-thirds of its exports go to Asia, which is projected to drive the market’s growth in the years ahead.
“Qatar is pursuing market share. This FID is likely to put pressure on other pre-FID LNG suppliers, who may find Qatar has secured a foothold in new markets,” Farrer said. Wood Mackenzie estimates that QP will have over 75 mmty of uncontracted volumes to sell by 2027 as its long-term contracts expire, or roughly 70% of its LNG portfolio.
QP is also constructing the 18.1 mmty Golden Pass LNG export project on the Texas Coast with joint venture partner ExxonMobil.
Monday’s announcement follows other moves QP has been making to significantly cut emissions, get more active in the growing LNG spot market and prepare for FID. The company started drilling wells early last year to feed the NFE project. The LNG expansion was announced in 2018 and later grew in scope after successful appraisal efforts determined that productive layers of the North Field extend into Qatari land in Ras Laffan.
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