TotalEnergies will invest around $1.5 billion in the planned expansion of Qatar’s liquefied natural gas capacity, the French energy major said on Saturday, a project that promises to ramp up gas supplies to energy-hungry European markets.
The company’s chief executive Patrick Pouyanne travelled to Doha to sign a deal with QatarEnergy chief Saad al-Kaabi for the North Field South (NFS) expansion, saying that the deal came at a “perfect time” when world leaders particularly in Europe were seeking new LNG supplies.
Qatar’s North Field expansion project will boost its position as the world’s top LNG exporter and help guarantee long-term supplies of gas to Europe as the continent seeks alternatives to Russian flows.
Kaabi said TotalEnergies would have a 9.375 percent stake out of a 25 percent stake in NFS dedicated for international partners. QatarEnergy will hold 75 percent of NFS. He said he could not disclose the total cost of the NFS project as some onshore contracts had not yet been finalized.
He added that QatarEnergy was always talking to buyers globally whether in Europe or Asia and would continue to do so for commercial contracts for the expansion project as per market needs.
“Half of our production normally goes East and half goes West, this equation may be the same or may be 60 percent to 40 percent according to market needs, it is a supply and demand issue,” he said.
Sources told Reuters last week that German utilities RWE and Uniper were close to striking long-term deals to buy LNG from the North Field east expansion to help replace Russian gas.
“Uniper and RWE have a great relationship with us, we have been dealing with them for the last 20 years, we have contracts with some of them,” Kaabi said.
“So, we are talking with both of them and there isn’t anything that I can say that is different from what I always say on commercial contracts, which is I don’t discuss them.”
Talks between Germany and Qatar have been fraught with differences over key conditions such as the length of contracts and pricing, but industry sources have said the parties were expected to reach a compromise soon.
German Chancellor Olaf Scholz landed in Saudi Arabia earlier on Saturday for a two-day visit to the Gulf region that will also take him to the United Arab Emirates and Qatar.
Qatar’s North Field expansion plan includes six LNG trains that will ramp up its liquefaction capacity from 77 million tonnes per annum (mtpa) to 126 mtpa by 2027.
It awarded contracts for the first phase of the expansion project, North Field East (NFE), which includes four trains, earlier this year.
TotalEnergies has already signed a deal for a stake in the NFE project and on Saturday became the first international partner to be announced for the NFS expansion that includes two trains.
Shell, Exxon, ConocoPhillips and Eni have all signed deals for stakes in the first phase NFE project.
Pouyanne said the world would need “so much gas” by 2025-2027 and that TotalEnergies was not overexposed to Qatar. “If Qatar had offered more investment then we would have invested more in Qatar,” he said.