The war in Ukraine is forcing investors to look elsewhere. Qatar announced on Saturday the signing of a major contract worth 1.5 billion dollars with the French gas and oil giant TotalEnergies for the development of the largest natural gas field in the world.
“QatarEnergy (QE) has selected TotalEnergies as the first foreign partner for the development of the North Field South (NFS) natural gas field,” the Qatari hydrocarbon giant said in a statement.
The announcement comes amid an energy crisis in Europe caused by Russia’s war in Ukraine, TotalEnergies CEO Patrick Pouyanné and Energy Minister and QatarEnergy (QE) CEO Saad Sherida Al-Kaabi , stressing the importance of long-term contracts to ensure Europe’s energy supply.
The total stoppage of Russian gas deliveries via the Nord Stream gas pipeline since September 2 has raised fears in Europe of a serious energy crisis this winter. “We need new capacities, that’s for sure and (this investment) is timely,” said the CEO of TotalEnergies on Saturday.
“Most leaders in the world now know (the importance) of LNG”, he added, advocating the conclusion of long-term contracts. “The question is simple, the longer it (the contract) is, the better the price will be for the buyer,” he said. “If one wants a cheap price for a short duration, the answer will be non », insisted Patrick Pouyanné.
Largest natural gas field in the world
North Field South and North Field East are expansion projects for the North Field offshore field, the largest natural gas field in the world that Qatar shares with Iran. North Field accounts for about 10% of the world’s known natural gas reserves, according to QE. It extends under the sea to Iran, which is struggling to exploit its part of the deposit due to international sanctions.
Saturday’s deal was signed in Doha by the two men. TotalEnergies will invest 1.5 billion dollars in the new project, said Patrick Pouyanné during a joint press conference with the Qatari minister. TotalEnergies “will have a reinforced strategic role” in gas development in Qatar, assured the latter.
According to QE, TotalEnergies’ stake in this project is 9.375%, while Qatar has set the total share of foreign companies at 25%. “Other partners will be selected at a later stage,” according to the Qatari news agency QNA.
The French giant had already signed an agreement in June worth more than 2 billion dollars with Doha for the development of the North Field East (NFE) project.
Oil tankers rush to Qatar
This announcement comes as German Chancellor Olaf Scholz began a tour of the Gulf on Saturday. He is due to meet Saad Sherida Al-Kaabi on Sunday, who declined to give details of negotiations with Berlin.
He further claimed that his country was in “negotiations with most buyers around the world, and some are in a more advanced state” than others, further confirming that Doha is in talks with Britain.
In July, British energy giant Shell was chosen as the fifth and final foreign partner to develop the North Field East project, where production is due to start in 2026. Through a joint venture with QE, the British company took a stake in 6.25% in the project, equivalent to that of the French TotalEnergies and the American ExxonMobil. The Italian Eni and the American ConocoPhillips each took shares of 3.125%.
Qatar, one of the world’s leading LNG producers and whose gas is one of the cheapest to produce, wants to increase its production by more than 60% to reach 110 million tonnes by 2027.
South Korea, Japan and China are the main customers, Europe having long opposed the long-term agreements desired by the emirate. But following the war in Ukraine, LNG importers are rushing to secure alternatives to Russian gas.