Trio of Majors Confirm Qatar LNG Expansion Bids

Royal Dutch Shell, Exxon Mobil and TotalEnergies have all confirmed that they submitted bids for stakes in the first phase of Qatar's massive LNG expansion project (IOD Feb.8'21). The CEOs of the three major oil companies all argued on Tuesday that LNG will play a strong role in the world's transition to low-carbon energy. They spoke during a panel discussion at the Qatar Economic Forum, which also included Qatari Energy Minister Saad al-Kaabi. The strong interest in Qatar's LNG expansion comes as no surprise. ConocoPhillips, Chevron and Eni were also short-listed and additional discussions about equity stakes have also been held with Qatar's Asian LNG customers (IOD May24’21). Al-Kaabi -- who is also CEO of state-owned Qatar Petroleum (QP) -- said the bids submitted by aspiring investors add up to roughly double the 30% of the equity that Qatar is offering. Two-Phase Expansion The first phase of the expansion will lift Qatar's LNG production capacity from around 77 million tons per year today to 110 million tons/yr. A proposed second phase will raise capacity to 126 million tons/yr. "I am a strong believer that the energy transition is going with gas, with LNG in particular," said Total CEO Patrick Pouyanne, who noted that demand for LNG had grown by almost 10% in the last five years. "Even last year in the middle of the pandemic and the economic crisis, there are two energies that were growing -- renewables and LNG," he said. Shell's Ben van Beurden said his company sees a stronger outlook for its gas business than for its oil business, adding "that is why we are keen to participate with our partner, QP, on the [LNG] expansion here in Qatar." Al-Kaabi touted the expansion project's green credentials -- especially its carbon capture and storage (CCS) component -- as a key attraction for Western investors and a "unique opportunity." Carbon Capture Qatar is already capturing some 2 million tons/yr of carbon dioxide, but volumes will rise dramatically as a result of the LNG expansion, hitting 9 million tons/yr by 2030, he said. QP also plans a raft of other "green" measures, including reduction of gas-flaring and the use of solar power to minimize greenhouse gas emissions (IOD Jan.13’21). There was unanimity among the panelists that the world must avoid underinvestment in oil and gas as it rushes to develop low- and zero-carbon energy sources. "We think there is going to be a big shortage of gas in the 2025-30 period and that could cause a big [price] spike in the gas market," al-Kaabi warned. Shell's Van Beurden slammed the heavy supply-side focus of current international efforts to tackle climate change. "This whole idea that if you would just curtail supply, that the world has no choice but to go for an energy transition, defeats any logic that I have come across," he lamented. Of the three CEOs who took part in the panel discussion, Van Beurden was the only one who was physically present with al-Kaabi in Qatar -- a fact that is probably not unconnected with Shell's bid for a stake in the LNG expansion. Rafiq Latta, Nicosia