Page 5 - GLNG Week 15

GLNG COMMENTARY GLNG
plans, in a further illustration of Qatari determi- nation to stick to its previous targets.
“We don’t have a project that is on the table that we are taking off the table. We are always looking for opportunities,” he said.
However, he also said that QP would post- pone the start of production from the expansion until 2025 as a result of delays to the bidding pro- cess. News of the delays came in mid-February, when it was reported that QP would take several months longer than previously anticipated to select Western partners for its LNG expansion project.
Six Western majors are reported to have been shortlisted. ExxonMobil, Royal Dutch Shell, Total and ConocoPhillips are already long-standing partners in Qatar’s LNG oper- ations, and it would not be surprising if they were all vying to participate in the next phase of expansion.
What next?
In February, sources familiar with QP’s dealings told Reuters that the selection of partners for the LNG expansion could be pushed back to at least the middle of this year. However, since then, conditions have worsened for the LNG indus- try as a number of countries went into lockdown in an effort to contain coronvirus (COVID-19) and demand fell further. Thus delays could prove to be even longer than expected in recent weeks.
And LNG spot prices have continued to trend downwards, making any new liquefaction pro- jects look less economically attractive. This was
reportedly already behind the initial delays for QP in selecting partners, forcing the company to revise its economic outlook for the project. Negotiations will likely become yet more chal- lenging if prices for the fuel continue to weaken – which currently appears to be the most likely scenario.
The commercial bid deadline for liquefaction facilities that will be developed under the first phase of expansion, meanwhile, has reportedly been extended to the second quarter of 2020.
Qatar has previously signalled that it is will- ing to carry out its North Field expansion alone if necessary, but the country would prefer to share the cost and risk. Consultancy Rystad Energy estimated in late February that additional North Field development was likely to cost more than $50bn in greenfield investments, with the first stage of the project accounting for about $35bn of this. Rystad said this first phase was now more likely to be approved in the first half of 2021, but this projection was made before COVID-19 began causing large-scale global disruption, and may yet be revised further.
The expansion’s first phase includes contracts for associated onshore liquefaction and storage facilities. Tenders for the project include con- struction of four liquefaction trains, utilities and offsite facilities, a helium recovery unit, non-technical buildings, warehouses, work- shops and associated facilities. The second stage of the expansion, during which two more trains would be added, is currently expected to be sanc- tioned by 2023 at the earliest – and could also be delayed further.™
Qatar has
previously signalled that it is willing to carry out its North Field expansion alone if necessary.
QP has started development drilling at the North Field East project as part of its LNG expansion plan.
Week 15 17•April•2020 w w w . N E W S B A S E . c o m
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