Page 4 - MEOG Week 24 2022

MEOG COMMENTARY MEOG

TotalEnergies takes first

stake in Qatar’s NFE JV

The French company has been awarded a minority stake in
Qatar’s flagship LNG project, but for Doha, there’s more to come.

QATAR SUPER-MAJOR TotalEnergies was unveiled and ExxonMobil; Italy’s Eni and Shell of the UK.
this week as Qatar’s main IOC partner in a joint Al Kaabi has said previously that IOC part-
venture (JV) formed to support the development ners could provide up to 30% of the funding for
WHAT: of its North Field East LNG expansion project. the $28.75bn project, with TotalEnergies tabbed
TotalEnergies picked up QatarEnergy awarded the French firm a 25% to furnish $7.2bn. He added that another partner
a 25% stake in a JV that stake in the NFE JV, which will hold a quarter would be announced later in the week.
will hold a 25% share in share in the development, giving TotalEnergies a Given ExxonMobil’s presence in five of
North Field East. 6.25% equity, with the agreement running until Qatar’s eight pre-existing LNG JVs, the US
2054. super-major is expected to take a share of around
WHY: 10% in the project. Meanwhile, Al Kaabi said that
As with other LNG Project QatarEnergy would take a final investment deci-
developments, NFE comprises the drilling of 80 wells, instal- sion (FID) on the next expansion phase – North
QatarEnergy is involving lation of eight offshore platforms, gas pipelines Field South (NFS) – by the end of the year. This
IOCs in financing the and four 8mn tonne per year LNG trains, which is seen increasing liquefaction capacity to 126mn
project, but in this case, will raise Qatar’s liquefaction capacity from the tpy by 2027.
it appears their stake will current level of 77mn tpy to 110mn tpy by 2027,
be even smaller. according to TotalEnergies. Question marks
QatarEnergy said first LNG cargoes from the While the deal is a clear ‘win’ for TotalEnergies,
WHAT NEXT: latest phase are anticipated by the end of 2025, the statements accompanying it left room for
Another partner is set but the Qatari NOC did not provide an update confusion in terms of the partner(s’) right to
to be announced, with for the output expansion. The 2027 date would offtake from NFE and whether it relates to the
sources suggesting it will represent a one-year delay compared to previous full project or just one train.
be ExxonMobil. guidance from Doha. NewsBase spoke to several deal watchers
Energy Minister and President and CEO who said that unlike a number of QatarEnergy’s
of QatarEnergy HE Saad bin Sherida Al Kaabi other LNG JVs, the NFE special purpose vehicle
called the signing an “historic landmark for (SPV) covers IOC investment in the full project.
Qatar’s energy industry”. This means that the Qatari firm will retain a 75%
Laurent Vivier, TotalEnergies’ SVP for direct shareholding in the NFE project with a
MENA E&P, said via social media: “NFE is an further stake – at least 60-65% according to Ian
exemplary low-carbon project, resilient across Simm, Principal Advisor at IGM Energy – in the
price cycles, well positioned to supply Asian but NFE JV. This ensures it will retain the rights to at
also European customers, building on the long least 90% of the expansion phase’s output.
expertise of Qatar.” Wood Mackenzie anticipates Even then, it is unclear as to whether TotalEn-
a long-term breakeven price of $4 per mmBtu ergies and any other potential partner will have
for NFE. marketing or offtake rights or obligations, as was
TotalEnergies was one of six IOCs involved the case in the previous JVs. Several sources sug-
in a bidding process that kicked off in 2019. Bids gested that partners are likely to market part of
are understood to have also been submitted in the volume from NFE, but there are likely to be
May 2021 by US firms Chevron, ConocoPhillips geographic and pricing restrictions attached.

QatarEnergy LNV JVs
Train Qatargas 1 Qatargas 2 Train 4 Qatargas 2 Train 5 Qatargas 3 Qatargas 4 Ras Laffan 1 Ras Laffan 2 Ras Laffan 3 NFE (2027) NFS (2027)
QatarEnergy % 100% 70% 65% 68.50% 70% 63% 67% 70% 75% 100%
Partner 1 ExxonMobil (30%) ExxonMobil (18.3%) ConocoPhillips (30%) Shell (30%) ExxonMobil (25%) ExxonMobil (31%) ExxonMobil (30%) TotalEnergies (25%)
Partner 2 TotalEnergies (16.7%) Mitsui (1.5) Korea Ras Laffan (5%) OPIC Middle East (2%)
Partner 3 Itochu (4%)
Partner 4 LNG Japan (3%)
Capacity (mmtpa) 9.9 7.8 7.8 7.8 7.8 6.6 14.1 15.6 32 16
Total 77.4 109.4 125.4

P4 www. NEWSBASE .com Week 24 15•June•2022