Partner selection for Doha’s looming 48 million ton per year LNG liquefaction expansion has captured all the headlines. But just as significant is Qatar’s downstream and trading expansion as state-owned QatarEnergy is positioning itself to become a major portfolio player. The giant LNG exporter is pursuing this through major liquefaction additions in Qatar and the US, clinching significant new regasification and shipping assets, and a massive expansion in trading. “Our marketing and trading organization is going to be huge,” Qatar’s Energy Minister and QatarEnergy CEO Saad al-Kaabi told delegates at last week’s Energy Intelligence Forum in London. “We will be, in the next five to 10 years, the largest LNG trader in the world by far.”
Efforts are ongoing to integrate the firm’s trading operations into the QatarEnergy Trading entity that was established two years ago. Currently it is trading some 5 million-10 million tons/yr, including third-party volumes, but a massive marketing expansion is envisaged. Profits already have been around 20 times those envisaged at this stage, al-Kaabi said.
QatarEnergy holds a significant regasification position in Europe, where it is the region’s second-largest LNG supplier after the US. The company is a a co-owner of the South Hook terminal in the UK and Italy’s Adriatic LNG terminals and holds regasification capacity at the UK’s Isle of Grain and France’s Montoir-de-Bretagne. It is also in talks, together with Shell, to build a regasification terminal in Pakistan. On the shipping side, QatarEnergy has already ordered 65-70 new LNG-fueled LNG tankers, with al-Kaabi saying it could reach close to 100 by investing $20 billion in shipping alone. Around 15 million tons of Qatari LNG are expected to go to Europe this year, with 12 million-15 million tons in 2023.
Al-Kaabi has a track record of delivering on public proclamations and the company he leads has both the resources and incentives to expand on trading. As both the top regulator, chief government decision-maker and head of QatarEnergy, al-Kaabi is in a unique position to implement policy decisions with a minimum of bureaucratic obstacles. Doha’s international marketing push also mirrors moves at rival national oil companies Saudi Aramco and the Abu Dhabi National Oil Co.
QatarEnergy is also poised to be a significant producer outside Qatar, having built up an empire of large minority stakes in offshore blocks across a number of prospective basins in recent years. Discoveries have been made in Cyprus, South Africa and most notably Namibia, where al-Kaabi was visiting this week.
NFS Partner Selection Continues
Three companies, all partners in Phase 1 of Qatar’s LNG expansion, are expected to be selected to hold equity stakes in the 16 million ton/yr Phase 2, dubbed North Field South (NFS), al-Kaabi said. TotalEnergies already won a 9.375% stake in NFS after getting a 6.25% stake in Phase 1. Other Phase 1 winners include ExxonMobil and Shell with 6.25% each and Eni and ConocoPhillips with 3.125% each.
With an overall 25% of NFS available, it is likely that Exxon and Shell could grab 6.25% each due to their engagement with Qatar. Either ConocoPhillips or Eni will likely snatch the remaining 3.125%. ConocoPhillips CEO Ryan Lance strongly values his firm’s historical Qatar relationship, sources say, while Eni’s energy transition strategy relies heavily on gas, having made getting access to low-cost Mideast reserves a priority. Replacing Italy’s dependency on Russian gas imports would also make these volumes attractive for Eni.
Expanding North Field further is also up in the air, with al-Kaabi saying earlier last month that a decision could be taken in the next two years. Total CEO Patrick Pouyanne let it slip that he would be interested in joining what he called “North Field West.”
The fate of existing Qatari projects is also unresolved. Al-Kaabi has made it clear that firms will have to demonstrate tangible value to stay in their concessions after expiry. Exxon, which had almost 3 billion cubic feet per day of net gas output and 144,000 barrels per day of oil production from Qatar, has stakes in nine of Qatar’s LNG trains. And these contracts all are due for renewal in the next few years.
The North Field expansion remains attractive as a low-carbon project, with QatarEnergy investing heavily in decarbonizing its LNG through carbon capture and storage (CCS) and the solarization of its facilities. “The fact there was CCS was absolutely critical for us as one of the components that made it the right project for us,” Shell’s Executive Vice President for LNG Cederic Cremers told reporters on the sidelines of the Forum.
Taken from energyintel