Page 4 - GLNG Week 24 2022

GLNG COMMENTARY GLNG

TotalEnergies takes first

stake in Qatar’s NFE JV

COMMMENTARY SUPER-MAJOR TotalEnergies was unveiled decision (FID) on the next expansion phase –
this week as Qatar’s main IOC partner in a joint North Field South (NFS) – by the end of the year.
venture (JV) formed to support the development This is seen increasing liquefaction capacity to
of its North Field East LNG expansion project. 126mn tpy by 2027.
QatarEnergy awarded the French firm a 25%
stake in the NFE JV, which will hold a quarter Question marks
share in the development, giving TotalEnergies a While the deal is a clear ‘win’ for TotalEnergies,
6.25% equity, with the agreement running until the statements accompanying it left room for
2054. confusion in terms of the partner(s’) right to
offtake from NFE and whether it relates to the
Project full project or just one train.
NFE comprises the drilling of 80 wells, instal- NewsBase spoke to several deal watchers
lation of eight offshore platforms, gas pipelines who said that unlike a number of QatarEnergy’s
and four 8mn tonne per year LNG trains, which other LNG JVs, the NFE special purpose vehicle
will raise Qatar’s liquefaction capacity from the (SPV) covers IOC investment in the full project.
current level of 77mn tpy to 110mn tpy by 2027, This means that the Qatari firm will retain a 75%
according to TotalEnergies. direct shareholding in the NFE project with a
QatarEnergy said first LNG cargoes from the further stake – at least 60-65% according to Ian
latest phase are anticipated by the end of 2025, Simm, Principal Advisor at IGM Energy – in the
but the Qatari NOC did not provide an update NFE JV. This ensures it will retain the rights to at
for the output expansion. The 2027 date would least 90% of the expansion phase’s output.
represent a one-year delay compared to previous Even then, it is unclear as to whether TotalEn-
guidance from Doha. ergies and any other potential partner will have
Energy Minister and President and CEO marketing or offtake rights or obligations, as was
of QatarEnergy HE Saad bin Sherida Al Kaabi the case in the previous JVs. Several sources sug-
called the signing an “historic landmark for gested that partners are likely to market part of
Qatar’s energy industry”. the volume from NFE, but there are likely to be
Laurent Vivier, TotalEnergies’ SVP for geographic and pricing restrictions attached.
MENA E&P, said via social media: “NFE is an The fanfare with which the latest deal was
exemplary low-carbon project, resilient across announced is unsurprising given the project’s
price cycles, well positioned to supply Asian but importance to Qatar, while it is also the first new
also European customers, building on the long phase to be announced since the country ended
expertise of Qatar.” Wood Mackenzie anticipates a self-imposed, 12-year moratorium on drilling
a long-term breakeven price of $4 per mmBtu in 2017. The ban had been implemented amid
for NFE. concerns about the depletion of pressure in the
TotalEnergies was one of six IOCs involved North Field, Doha’s most important strategic
in a bidding process that kicked off in 2019. Bids asset.
are understood to have also been submitted in
May 2021 by US firms Chevron, ConocoPhillips Progress
and ExxonMobil; Italy’s Eni and Shell of the UK. Drilling work for NFE began in April 2020
Al Kaabi has said previously that IOC part- and a series of major deals have been awarded
ners could provide up to 30% of the funding for since. Over the past 12 months, more than
the $28.75bn project, with TotalEnergies tabbed $20bn of contracts have been handed out, the
to furnish $7.2bn. He added that another partner largest of which was the $13bn EPC deal with a
would be announced later in the week. JV between Chiyoda and Technip Energies cov-
Given ExxonMobil’s presence in five of ering the construction of four LNG mega-trains
Qatar’s eight pre-existing LNG JVs, the US and associated facilities.
super-major is expected to take a share of around A major breakthrough came in January when
10% in the project. Meanwhile, Al Kaabi said US-based McDermott won an engineering, pro-
that QatarEnergy would take a final investment curement, construction and installation (EPCI),

P4 www. NEWSBASE .com Week 24 17•June•2022