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TotalEnergies signs an agreement with Qatar to develop the largest natural gas field in the world

  • Post category:Economy News
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Qatar announced on Saturday the signing of a major contract with French oil and gas giant TotalEnergies for the development of the world’s largest natural gas field, amid an energy crisis in Europe caused by the Russian war in Ukraine. .

QatarEnergy (QE) has selected TotalEnergies as the first foreign partner for the development of the North Field South (NFS) natural gas field“, said the Qatari hydrocarbon giant in a press release.

The French giant has already signed an agreement of more than 2 billion dollars with Doha in June for the development of the North Field East (NFE) project.

North Field South and North Field East are expansion projects for the offshore North Field, the world’s largest natural gas field that the Gulf country shares with Iran.

“Strengthened strategic role”

Saturday’s deal was signed in Doha by Qatari Energy Minister and CEO of QE, Saad Sherida al-Kaabi, and Patrick Pouyanné, CEO of TotalEnergies.

This new agreement will require an investment of 1.5 billion additional dollars, Pouyanné said during a joint press conference with the Qatari minister.

TotalEnergies”will have a reinforced strategic role” in gas development in Qatar, assured Mr. Kaabi.

According to QE, TotalEnergies’ stake in this project is 9.375%, while Qatar has set the total share of foreign companies at 25%. “Other partners will be selected at a later stage“, reported for its part the Qatari press agency QNA.

North Field accounts for about 10% of the world’s known natural gas reserves, according to QE. It stretches under the sea to Iranian territory, where efforts by the Islamic Republic to exploit their part of this deposit are hampered by international sanctions

Qatar is already one of the main LNG producers in the world, along with the United States and Australia. Doha aims to increase its production by more than 60% to reach 110 million tonnes by 2027.

South Korea, Japan and China are the main customers, Europe having long opposed the long-term agreements desired by the emirate. But following the war in Ukraine, LNG importers are rushing to secure alternatives to Russian gas.

A “price” to pay

The total stoppage of Russian gas deliveries via the Nord Stream gas pipeline since September 2 has raised fears in Europe of a serious energy crisis this winter, prompting European governments to call on the population and businesses to reduce their consumption. “We need new capabilities, that’s for sure and (this investment) is timely“, said the CEO of TotalEnergies on Saturday. “Most world leaders now know (the importance) of LNG“, he added, making it clear that European countries must make more long-term investments and pay a possibly higher price to secure their energy supply.”To ensure supply, there is a price (to be paid)“, he said.

The announcement comes as German Chancellor Olaf Scholz is due to begin a Gulf tour on Saturday, where he is due to visit Saudi Arabia, the United Arab Emirates and Qatar.

Mr Kaabi, who is due to meet Mr Scholz on Sunday, declined to give further details on ongoing negotiations with European countries, but said some of those talks were “in a more advanced state” than others. He also confirmed that Doha is in negotiations with Great Britain.

In July, British energy giant Shell was chosen as the fifth and final foreign partner to develop the North Field East project, where production is due to start in 2026.

Through a joint venture with QE, the British company took a 6.25% share in the project, equivalent to that of the French TotalEnergies and the American ExxonMobil.

Italian Eni and American ConocoPhillips each took shares of 3.125%.