Qatar Awards Key Contract for LNG Expansion

QatarEnergy on Thursday awarded the final major construction tender for Phase 1 of its 48 million ton per year LNG expansion, targeted for 2027, and alluded to further LNG growth beyond that volume.

A joint venture (JV) of Spain’s Tecnicas Reunidas and Chinese firm Wison Engineering will build the sulfur handling, storage and loading facilities associated with the four-train 32 million ton/yr Phase 1, dubbed North Field East (NFE).  

Partner selection for foreign investors to take equity stakes in NFE has been repeatedly delayed, most recently missing an end-March deadline. But Doha confirmed that NFE remains “scheduled to start by year-end 2025."

Beyond NFE

Like other engineering firms building Phase 1, the Tecnicas Reunidas-Wison JV contract “will also include an option for further expansion to support sulfur production for the two additional LNG trains” of the 16 million ton/yr Phase 2, known as the North Field South (NFS) project, QatarEnergy said.

No official final investment decision has been announced on NFS, but the expectation is that it will go ahead with the project, with start-up scheduled for 2027. On completion of NFS, Qatari LNG expansion will hit 126 million tons/yr.

Intriguingly, QatarEnergy noted the contract also included an option for “infrastructure to support future additional LNG trains.”

Qatari Energy Minister Saad al-Kaabi has made mention, several times, of further North Field expansion.

Prior to the start of the Ukraine war, the buzz in Qatar was that this gas would potentially go to start Qatar’s first major hydrogen project, as part of the emirate's push for economic diversification. But such has been the clamor for more Qatari LNG from EU consumers looking to wean themselves off Russian gas that it would come as no surprise were Doha to accelerate its North Field plans and opt for tried-and-tested LNG.

Stake Sale

Exxon Mobil, Royal Dutch Shell, TotalEnergies, ConocoPhillips, Chevron and Eni have all been shortlisted for up to a 30% stake in Phase 1. Doha has also been talking to Asian customers regarding potential equity stakes. Low-cost, low-carbon gas, massive economies of scale and abundant, profitable associated natural gas liquids make NFE a highly sought-after prize.

Both Exxon and Total will be keen to recoup the loss of their prized Qatargas-1 contract, which expired end-2021.  

Total’s first-quarter 2022 results, announced on Thursday, revealed the impact of this loss, with its net regional gas output plummeting some 12% from the fourth quarter to 724 million cubic feet per day. And the French major's overall corporate net gas output is down by 2% versus the fourth quarter.