Page 4 - GLNG Week 08 2021

GLNG COMMENTARY GLNG

Qatari deals come amid

push for LNG dominance

Two separate LNG-related deals have been announced this week,

involving Qatargas and its parent company, Qatar Petroleum

PROJECTS & TWO separate LNG-related deals have been
COMPANIES announced this week, involving Qatargas and
its parent company, Qatar Petroleum (QP).
WHAT: On February 22, Italy’s Saipem said it had
Two separate LNG-related received a contract worth around $1.7bn from
deals involving state- Qatargas for engineering, procurement, con-
owned Qatari firms have struction and installation (EPCI) of various
been announced. offshore facilities at Qatar’s North Field. The
facilities, for the extraction and transportation
WHY: of natural gas, will be installed as part of Qatar’s
Qatar is on a push to project to expand its LNG production capac-
maintain and expand its ity to 110mn tonnes per year from 77mn tpy
LNG dominance. currently.
Separately, QP has struck a long-term deal
WHAT NEXT: to supply 1.25mn tpy of LNG to commodity
The country’s NFE project trader Vitol for delivery to the latter’s customers
to expand LNG capacity is in Bangladesh. Deliveries are set to begin later
expected to enter service this year, from Qatar’s existing LNG production.
by the end of 2025. This comes as Bangladesh is facing growing
demand for gas from various sectors, including Qatar’s LNG expansion
industry, power plants and fertiliser plants. Aside from gas for liquefaction, the upstream will be underpinned
component of the NFE project will produce con- by its North Field East
Capacity push densate, liquefied petroleum gas (LPG), ethane, (NFE) development.
Both deals follow QP’s final investment decision sulphur and helium. Its combined output will be
(FID) on its North Field East (NFE) expan- 1.4mn barrels of oil equivalent per day (boepd).
sion project, announced earlier this month. The project is anticipated to begin production
At the same time, the company awarded the in the fourth quarter of 2025, ramping up to full
onshore EPC contract for the four LNG mega- capacity by late 2026 or early 2027, and QP has
trains included in the scheme to a joint venture estimated the expansion’s total cost at $28.75bn.
between Chiyoda and Technip Energies. The Wood Mackenzie has suggested that this is likely
expansion is the largest single LNG project to be the largest project sanctioned across the
ever to be sanctioned, according to consultancy global upstream sector this year.
Wood Mackenzie. Another consultancy, Rystad In addition to the offshore EPCI contract,
Energy, has said the expansion puts Qatar on Saipem appears to be set to be awarded another.
track to return as the world’s largest LNG pro- The Italian company said it had received a letter
ducer by 2030, having recently been edged out by of intent (LoI) from Qatargas covering the con-
Australia. When Qatar reaches full LNG produc- tractual package for offshore export pipelines
tion capacity of 110mn tpy, Rystad estimates this and related onshore work for the North Field
will account for 18% of the global total, which it expansion project. The award is subject to the
currently puts at 600mn tpy by 2030. However, finalisation of contractual details and Qatargas’
additional capacity could be sanctioned early final approval.
this decade that would come online by then, and
the consultancy has also noted that utilisation Seeking supply deals
rates do not necessarily match capacity. Indeed, In the meantime, QP continues its efforts to con-
it expects Qatar’s actual production in 2030 to tract out current and future LNG production, as
reach 107mn tpy, though this would be a higher illustrated by the Bangladesh deal it struck with
utilisation rate than it anticipates by that year Vitol.
from the US, with 91%, or Australia, with 86%. Qatar has touted the low cost of its LNG, and

P4 www. NEWSBASE .com Week 08 26•February•2021