Qatar has the world’s third-biggest proven natural gas reserves.
TotalEnergies SE is set to make another investment in Qatar’s natural gas fields, according to sources familiar with the matter, Bloomberg said.
As Europe seeks to steer away from its dependence on Russian gas amid the invasion of Ukraine, EU countries are scrambling for a share in the world’s biggest liquified natural gas (LNG) project, Qatar’s North Field Expansion project.
The multi-billion North Field project is expected to drastically increase the Gulf nation’s liquefaction capacity by 64%, by 2027.
The chief executive of TotalEnergies, Patrick Pouyanne, and Qatar’s energy minister, Saad Sherida Al Kaabi, may both attend a signing ceremony on Saturday in the Qatari capital, according to the source.
The amount of investment in the North Field South, however, remains unclear. The sector includes the construction of gas liquefaction plants.
In June, the French company was selected by QatarEnergy to partner with on the North Field East Project, a separate gas project costing an estimated $29 billion and equity stakes worth 25%.
The Qatari company holds the remaining 75%.
The North Field East is one of two parts to the $28.75 billion North Field LNG project that is set to ramp up Qatar’s production from 77 to 110 million tonnes per annum.
The second part is the North Field South project, which will increase Qatar’s LNG production capacity from 110 to 126 million tonnes per annum.
German bids for Qatari gas
This also comes as German utilities RWE and Uniper also inch closer to sealing long-term agreements to purchase LNG from the North Field Expansion project in an attempt to replace Russian gas, three sources privy to the matter told Reuters.
Differences in important conditions, such as contract length and price, have thrown a spanner in the negotiations between Germany and Qatar, however according to the unnamed industry sources, the parties are expected to reach a ‘compromise’ soon.
The largest economy in Europe hopes to replace all Russian energy imports by as early as mid-2024.
Although supply agreements with Qatar pose a great advantage to Germany, they do not provide a quick fix to Berlin’s energy crisis since the massive North Field Expansion plan is not anticipated to be operational until the year 2026, Reuters said.
In May, Reuters reported that the negotiations had stalled due to Germany’s lack of willingness to sign contracts that would last for at least 20 years, wanting to tie costs to Dutch benchmark gas prices rather than oil.
A source noted that the discussions in place at present have been “more fruitful” than they were a few months ago, while another source predicted that the utilities will agree to 15-year contracts with the Gulf country. A third source claimed that a deal might be made in a matter of weeks.
As it stands, the two utilities already purchase LNG from Qatar on the spot market. In 2016, RWE struck a deal with Qatar for up to 1.1 million tonnes of LNG annually, which is set to end by next year, according to Bloomberg.
Germany’s chancellor, Olaf Scholtz, will be on a visiting three Gulf Cooperation countries, including Saudi Arabia and the United Arab Emirates and ending with Qatar on Sunday, 25 September.
According to German Vice-Chancellor Robert Habeck, Scholz is expected to sign LNG contracts while in the UAE.
RWE and Uniper are “unlikely” to sign contracts with Qatar during Scholz’s visit because, according to one of the sources, governments and business leaders normally reach broad agreements first and then work on the specifics.
In an interview with Bloomberg published on Wednesday, Qatar’s Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani said that Doha has been a reliable partner in the energy sector for years, indicating that there are negotiations with Qatari and German commercial companies to supply Germany with energy.
The Qatari minister emphasised that the negotiations are still underway and that they are uncertain of whether a deal will be achieved within a week, adding that proceedings are taking place without the interference of the Qatari government as the companies involved are commercial.
Qatar’s strategy is focused on long-term contracts, the Qatari top diplomat said in response to a questions about the length of the contract with the German side.