Awards for Qatar LNG Expansion Loom

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The long-awaited first awards for prized equity stakes in Qatar’s 48 million ton per year LNG expansion could be signed as early as this Thursday.

State-owned QatarEnergy has invited international press to attend “an important signing ceremony” for midday local time on Thursday. There have been no hints as to the precise purpose of the occasion, but two sources tell Energy Intelligence that equity stakes in the expansion's 32 million ton/yr first phase, dubbed North Field East (NFE), have been awarded. Awards have been repeatedly postponed, but the latest delay put them back to around June, also suggesting that a signing of equity partnerships looms on Thursday.

Two awards were made around two weeks ago, with one going to an existing partner and another to a new one, says one of the sources. Six Western majors were initially shortlisted to take stakes totaling as much as 30% in NFE. These were existing investors Exxon Mobil, Shell, ConocoPhillips, TotalEnergies and new investors Eni and Chevron. But QatarEnergy subsequently expanded equity discussions to include a number of key players in its Asian customer base.

Construction of the $28.75 billion NFE project is well under way, with Doha targeting a staggered start-up from late 2025. The first source suggested a relatively modest stake has been awarded thus far. This would jibe with earlier comments by Qatar’s Energy Minister Saad al-Kaabi to the effect that QatarEnergy might also take a staggered approach to awarding the equity stakes.

Blue-Chip Project

In addition to naturally low-cost reservoirs, NFE's profitability will be boosted by large volumes of associated liquids and condensate. Furthermore, QatarEnergy is investing heavily in carbon mitigation technologies such as carbon capture and storage; solarization of the facilities' utilities; and flare and methane emissions reduction, making it the premier LNG project for green investors.

"Qatar has placed sustainability front and center and focused our resources to develop emission reduction technologies and cleaner energy,” Qatar's Emir Sheikh Tamim bin Hamad al-Thani told delegates attending the World Economic Forum in Davos on Monday.

Competition for equity stakes is likely to be white-hot, with awards set to reshape the region's oil and gas investment terrain. Both Exxon and Total are smarting from the loss of their Qatargas-1 project last year. The French major has made gas a priority, but even before the loss of Qatargas-1, it is by some distance the most oil-heavy of its peer group in the Middle East, in large part due to conflict-triggered force majeures in Syria and Yemen LNG. NFE offers the best tool to remedy these setbacks. A stake in the expansion would also give it synergies with its expanding role in solarizing Qatar's giant Ras Laffan LNG complex.

Eni, whose host country Italy remains among Europe’s most exposed economies to Russian gas, is also likely to have bid aggressively, if recent moves to diversify in North Africa are any indication. Chevron, traditionally a peripheral player in the Gulf, has made no secret of its wish to build up its regional business. And while Shell has dialed back its Mideast commitment in recent years, its partnership with QatarEnergy on its flagship Namibia exploration project suggests Qatar might be an exception.

Industry practice would suggest that success on NFE would put firms in a stronger position regarding stakes in the 16 million ton/yr Phase 2 and subsequent developments on Qatar’s North Field. Phase 2, which is targeting start-up in late 2027, will take Qatar LNG capacity to 126 million tons/yr. Al-Kaabi has talked of a decision on additional North Field expansions soon. Space limitations at Ras Laffan mean further expansion will likely be limited to just one train.

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