Qatar Energy Follows Up Total Energies LNG Deal With Another From Shell

Qatar Energy announced Wednesday two contracts from Shell PLC for the supply of liquefied natural gas (LNG) at up to 3.5 million metric tons per annum (MMtpa) for 27 years, meant for the Netherlands and to be sourced from Qatar.

The announcement comes days after the state-owned LNG giant unveiled two agreements to supply TotalEnergies with a maximum of 3.5 MMtpa of LNG for 27 years, to be sourced from Qatar for distribution in France.

The deals signal a growing presence for Qatar in the European gas market amid the region’s bid to wean itself off Russian fossil fuels, as well as indicate a heightening competition with the USA as Europe’s alternative gas source.

Deliveries for both France and the Netherlands are expected to start 2026, according to press releases QatarEnergy posted on its website. In the Netherlands, the LNG will be delivered to the Gate LNG terminal in the Rotterdam port while in France the point of delivery will be the Fos Cavaou LNG terminal in the south of the country, according to the news releases, which did not disclose the value of any of the contracts.

Supplies for both countries will come from the North Field expansion projects, where both Shell and TotalEnergies hold participating stakes.

Britain’s Shell has a 6.25 percent share in the North Field East expansion project, planned to produce 32 MMtpa, and 9.375 percent in the North Field South expansion project, designed with a 16 MMtpa capacity.

France’s TotalEnergies also holds a 6.25 percent ownership in the East project and 9.375 percent in the South one.

Competition with USA

“These agreements reaffirm Qatar’s commitment to help meeting Europe’s energy demands and bolstering its energy security with a source known for its superior economic and environmental qualities”, QatarEnergy president and chief executive Saad Sherida Al-Kaabi, who is also Qatar’s energy minister, said in the Wednesday announcement announcing the agreements with Shell.

Qatar has been among the world’s biggest LNG exporters alongside Australia, Russia and the USA. It had held the top spot until Australia overtook it in 2021, when the Gulf state exported about 3.77 trillion cubic feet (106.8 billion cubic meters), according to BP PLC’s 2022 annual review of the energy market.

Asia-Pacific has been Qatar’s traditional market, accounting for around 2.72 trillion cubic feet (76.9 billion cubic meters) of the region’s LNG imports 2021 and 2.86 trillion cubic feet (81.1 billion cubic meters) last year, according to the last two BP annual energy reviews.

But there has been an increasing demand for Qatari gas in Europe amid the region’s pivot away from its traditional fossil fuel exporter Russia in the aftermath of the Putin regime’s invasion of Ukraine February 2022.

Qatar was the European Union’s top LNG supplier in the first quarter of this year accounting for 12 percent or 130.66 billion cubic feet (3.7 billion cubic meters), according to the 27-nation bloc’s quarterly gas market report published October 6. The USA was top accounting for 41.5 percent, while Russia was second with 19 percent, according to the report.

QatarEnergy, though, continues to strengthen its hold in the Asian LNG market. On June 20 it signed with China National Petroleum Corp. (CNPC) what it called the world’s biggest LNG sale and purchase agreement. Under the pact with the state-owned CNPC, China has committed to four MMtpa of LNG for 27 years, to be sourced from the North Field, QatarEnergy said in a press release at the time.

Earlier that month it penned an agreement to sell about 1.8 MMtpa of LNG to Bangladesh for 15 years through Bangladesh Oil, Gas and Mineral Corp., with delivery starting 2026.

Qatar already delivers over 3.5 million MMtpa of LNG to the South Asian country, making the Gulf state the largest LNG exporter of Bangladesh, Al-Kaabi told the signing ceremony in Doha, according to a QatarEnergy news release June 1.

North Field Expansion

Key to Qatar’s LNG leadership is the 2.3-square mile North Field, discovered 1971. The field, about half of the country’s land area and considered the largest in the world, has averaged over 700 million cubic feet per day in gas production, QatarEnergy says on its website.

QatarEnergy has already awarded the engineering and procurement contracts for both expansion projects and on October 3 announced the start of construction.

The east and south expansions will raise Qatar’s LNG production capacity to 126 MMtpa by 2026, according to the company.

Source : Rigzone