TotalEnergies SE has been awarded an equity stake in Qatar’s massive North Field East (NFE) liquefied natural gas (LNG) expansion project.
The French major becomes the first partner in the 32 million metric tons/year (mmty) project. It was awarded a 25% interest alongside QatarEnergy (QE), which has a 75% stake.
“This new partnership will enable us to reinforce our global LNG portfolio and, together with Qatar, it will support our ability to contribute to Europe energy security,” TotalEnergies CEO Patrick Pouyanné said at the award ceremony on Sunday.
More partners in the massive NFE project are expected to be awarded stakes in the coming weeks. Other potential bidders include ExxonMobil, Shell plc, ConocoPhillips, Chevron Corp. and Eni SpA as well as Chinese and Japanese firms
“Other [equity] partners are slated to join the NFE project, as final terms have been agreed and the relevant announcements will be made soon,” said QE CEO Saad Sherida Al-Kaabi.
The upstream part of NFE will develop the south-eastern area of the field with 8 platforms, 80 wells and gas pipelines to the onshore plant. The first phase includes four 8 mmty liquefaction trains to increase Qatar’s total LNG export capacity from 77 mmty to 110 mmty, with first LNG production slated by 2027.
QE offered equity stakes in the NFE first phase, with bids for equity in the project submitted shortly after Qatar reached a final investment decision on the $30 billion project in February 2021. However QE has twice postponed the selection of equity partners.
QE postponed awarding equity stakes late last year until 1Q2022. Al-Kaabi said at the time that QE had received offers for double the available equity. The award date continued to slip into the second quarter with the long delays attributed to the increase in offers.
The company is advancing the expansion project at a time when global gas prices are surging and the world is short on supplies, particularly as buyers look for alternatives to Russian fossil fuels following the invasion of Ukraine.
Although there was strong interest from foreign participants for the first phase of the project, which includes four trains, the delays may have been so QE could line up participation in all six trains, said David Hewitt, lead consultant of Hewitt Energy Perspectives. The second phase, the North Field South (NFS) project, would include the final two trains and bring the country’s total liquefaction capacity to 126 mmty.
QE decided not to renew the 25-year joint venture contract for Qatargas 1 with partners ExxonMobil, TotalEnergies, Marubeni Corp., and Mitsui & Co.. The contract expired in December 2021, with QE taking full ownership of the 9.9 mmty project.
However, ExxonMobil and TotalEnergies have been front-runners as potential partners in the NFE project since both have long-term relationships with developing Qatar’s offshore gas field. ExxonMobil remains a partner in nine of the fourteen existing LNG trains. Total Energies holds a 16.7% stake in Qatargas 2.
Any winners awarded for Phase 1 could be in good standing for stakes in the 16 mmty NFS Phase 2 of the project. QE will announce partners for the second NFS phase by the end of the year, Al-Kaabi said on Sunday.
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