France’s Total Energy plans to pump $1.5 billion into boosting gas production from Qatar’s huge North Field, on top of more than $2 billion already announced in June.
Doha (AFP) – France’s Total Energy on Saturday signed a new $1.5 billion deal to help expand natural gas production in Qatar as Europe seeks new energy sources to replace Russian supplies.
But TotalEnergies Chairman Patrick Pouyanne and Qatari Energy Minister Saad Sherida al-Kaabi have expressed surprise at reports that Germany is resisting 20-year contracts – and insisted that Europe must agree to longer contracts to guarantee supplies.
Al-Kaabi said at a signing ceremony that the French energy giant would own 9.3 percent in Qatar’s North South Field project, which is part of the world’s largest natural gas reserves.
Pouyanne said TotalEnergies will invest $1.5 billion in the new field.
It had already agreed in June to pump more than $2 billion into Qatar’s Northeast Field, and Al Kaabi said, “Through this agreement, we see an enhanced position for TotalEnergies as a long-term strategic partner.”
Al-Kaabi said that 25 percent of the field will be allocated to foreign companies and that more deals will be announced in the coming weeks.
Britain’s Shell, Italy’s Eni, ConocoPhillips and US giant ExxonMobil have already signed on to be part of Northfield East.
Qatar has embarked on a massive expansion of the entire North Field, with the goal of increasing its LNG production by more than 60% by 2027.
The increase comes as Europe struggles to replace Russian oil and natural gas supplies that have fallen victim to the Ukraine war.
Al-Kaabi, who will host talks with German Chancellor Olaf Schulz in Doha on Sunday, declined to discuss negotiations with Germany but expressed surprise at media reports of Qatar’s insistence on a 20-year supply deal.
Russia’s invasion of Ukraine in February came as Europe was already facing an energy crisis and the Gulf state hosted several visits by European leaders seeking gas supplies.
Europe had rejected the long-term deals sought by Qatar, but a change of heart was forced as it faced a looming winter of energy shortages.
“We are in active discussions with the majority of buyers around the world and some are progressing more than others,” Al-Kaabi said in a press conference after the ceremony.
“For us, 15 plus years is a long-term deal,” the minister added.
Pouyanne said Europe would have to accept longer deals to ensure supplies. Producing countries and major energy companies insisted on the need for certainty in contracts to justify the huge investments needed in the gas industry.
Patrick Pouyanne, CEO of TotalEnergies, says Europe needs to accept longer deals to justify the massive investments in the gas industry needed to replace Russian supplies.
“Most of the world’s leaders have discovered the term LNG,” Boyan said.
“The question is simple – the longer (the contract), the better the price for the buyer.
“If you want a cheap price for a short time, the answer is ‘No’.”
Qatar is one of the world’s largest LNG producers, along with the United States, Australia, and Russia.
The state-owned Qatar Energy Company estimates that the North Field contains about 10 percent of the world’s known natural gas reserves.
LNG from the North Field is expected to start operating in 2026.
The offshore reserves extend across the maritime border with Iran, whose efforts to exploit the neighboring South Pars field have been hampered by US sanctions.
South Korea, Japan and China have long been the main markets for Qatari LNG.
Qatari gas is among the cheapest gases produced and has fueled an economic boom in the tiny Gulf emirate, which is now one of the world’s richest countries.