QP Teams Up With Shell as LNG Selection Looms

Qatar Petroleum (QP) has farmed into two Royal Dutch Shell exploration blocks offshore Namibia as it continues to use its massive LNG expansion project as a carrot to forge upstream partnerships with Western oil majors. Over the past four years, QP has leveraged its LNG expansion to build a portfolio of stakes in more more than 60 exploration blocks in a dozen or so countries around the world (see table). This latest deal comes as QP prepares to select foreign investment partners for the 32 million ton per year first phase of its LNG expansion, which will consist of four new liquefaction trains (LNGI Feb.8'21). Industry watchers will be wondering whether the deal with Shell will increase its chances of being selected for a role in that project, but that's a tough question to answer. Qatar is offering a combined stake of up to 30% in the first phase of the expansion and it has short-listed six companies to become lead foreign partners: Exxon Mobil, Total, Shell, ConocoPhillips, Chevron and Eni. Bids are expected to be submitted around May. Selection of the partners will follow in a staggered process and should be complete by year's end, according to Energy Minister Saad al-Kaabi. But QP has said on numerous occasions that it is prepared to develop the project alone if bids from aspiring foreign investors are not sufficiently attractive. QP Active Again After Long Pause The Namibia deal with Shell follows a long pause in QP's drive to build an international upstream exploration portfolio. In the three years to May 2020, QP farmed into or jointly acquired non-operated minority stakes in 61 blocks. In all of those cases it partnered with companies that were short-listed for Qatar's big LNG opening. But over the last year or so, it had done just one deal prior to the Namibia transaction with Shell -- farming into Total's deepwater Block 48, offshore Angola. Based on the number of blocks involved, Eni and Exxon Mobil have emerged as QP's biggest upstream partners. However, six out of the last seven deals prior to the Namibia farm-in with Shell were done with Total. Thus far, QP has not concluded any upstream deals with either Conoco or Chevron. However, Chevron found another way to support its bid for a role in the LNG expansion through joint investment in petrochemicals projects with QP. In 2019, QP took a 49% stake in a Chevron affiliate's petrochemical project on the US Gulf Coast, after the same affiliate acquired a 30% stake in a petrochemical project in Qatar (LNGI Jul.10'19). In the Namibia deal announced Tuesday, QP will take 45% stakes in deepwater blocks 2913A and 2914B. Shell will remain operator with 45% while Namibia's state-owned Namcor will hold the remaining 10%. "With this second exploration and production sharing agreement in Namibia, we are pleased to expand our exploration footprint in the country, and to further strengthen our presence in the southern Africa region," al-Kaabi said. QP had previously entered the Namibian upstream sector under a 2019 deal with Total. Rafiq Latta, Nicosia QP’s Upstream Shopping Spree Lead Partner No. of