Page 16 - RusRPTSept22

2.4 Qatar to boost LNG production but that won't help Europe until after 2025
With Russia tightening its squeeze on supply of gas to Europe, governments are turning their attention to other major gas exporters such as Qatar to try to fill the gap. But Qatar’s gas sector is already operating close to capacity and, while the North Field expansion that comes online from 2025 will boost the country’s LNG capacity by over 60%, this wouldn’t be a panacea for Europe’s gas shortages.
As Russia has reduced the supply of gas to Europe in recent months, there has been some hope that Qatar – the world’s largest LNG exporter – will be able to step in to fill the void. But those hopes are likely to be disappointed given that Qatar is already producing at or near its capacity and there is no new infrastructure to boost output coming online in the very near future.
There are limitations to the amount of LNG that Europe would be able to import. Europe’s LNG imports will rise by 60% to 100mn tonnes this year, below total capacity of around 150-160mn tonnes –boosted from next year onwards following purchases of Floating Storage Regasification Units (FSRU). But a large share of the spare capacity is in the south of Europe (Spain, Portugal, and southern Italy), but these countries have no pipelines into the north.
The gamechanger for Qatar’s economy and, potentially, the global LNG market will be from 2025 as the North Field comes online. The North Field will be the largest ever single LNG facility globally and will be nearly double the size of the next largest. It will raise Qatar’s total production capacity from 77mn tonnes per year (mtpa) to 126mtpa (a 64% increase) once all stages are completed in 2027.
What’s more, new facilities currently under construction will raise global LNG supply by 25% in the next five years with the North Field contributing a third of this alone.
Of the 25% share in the North Field that Qatar tendered, three of the five energy firms involved are European – TotalEnergies (France), Shell (UK), and Eni S.p.A (Italy) – and account for close to two-thirds of this share. These were signed in June as Europe’s energy crisis intensified and energy firms tried to jump to the front of the queue for Qatar’s LNG exports.
North Field will not be a panacea for Europe if Russia completely turns off the taps. In 2021, Russia’s gas exports (both pipelined and LNG) were equal to 135.5mtpa (12.8mtpa of LNG and 122.7mtpa of pipelined gas).
The first phase of the North Field facility will produce 33.0mtpa of LNG each year and the second phase will add a further 16.0mtpa annually to capacity. So, the North Field could easily offset the loss of Russian LNG to Europe, but it would only cover just over a third of total Russian gas exports – and this rests on the assumption that all LNG from the North Field is sent to Europe.
16 RUSSIA Country Report September 2022 www.intellinews.com