Qatar announces new gas output boost with mega field expansion

On February 26, 2024, 5:00 AM

Qatar has announced new plans to expand output from the world’s biggest natural gas field, saying it will boost capacity to 142 million tonnes per annum (mtpa) before 2030.

The new North Field expansion, named North Field West, will add a further 16 million tonnes of liquefied natural gas (LNG) per year to existing expansion plans, Qatar’s Energy Minister Saad Sherida al-Kaabi said at a news conference on Sunday.

“Recent studies have shown that the North Field contains huge additional gas quantities estimated at 240 trillion cubic feet, which raises the state of Qatar’s gas reserves from 1,760 [trillion cubic feet] to more than 2,000 trillion cubic feet,” said al-Kaabi, who also heads the state-owned company QatarEnergy.

These results “will enable us to begin developing a new LNG project from the North Field’s western sector with a production capacity of about 16 million tonnes per annum”, he said.

This will bring Qatar’s production capacity to 142 million tonnes once “the new expansion is completed before the end of this decade” – a nearly 85 percent rise from current production levels, al-Kaabi added.

The QatarEnergy chief said the firm will “immediately commence” with engineering works to ensure the expansion is completed on time.

Qatar is one of the world’s top LNG producers alongside the United States, Australia and Russia.

Asian countries led by China, Japan and South Korea have been the main market for Qatari gas, but demand has also grown from European countries since Russia’s war on Ukraine threw supplies into doubt.

The latest expansion plans follow a flurry of announcements for long-term Qatari gas supply deals.

Earlier this month, Qatar said it would supply 7.5mtpa of LNG for 20 years to India’s Petronet, with the first deliveries expected from May 2028.

At the end of January, QatarEnergy announced a deal with US-based Excelerate Energy to supply Bangladesh with 1.5mtpa of LNG for 15 years.

Last year, Qatar signed LNG deals with China’s Sinopec, France’s Total, Britain’s Shell and Italy’s Eni.

Global price collapse

Competition for LNG has ramped up since the start of the war in Ukraine, with Europe, in particular, requiring a large quantity to help replace Russian pipeline gas that used to make up almost 40 percent of the continent’s imports.

The Qatari announcement came as the US gas prices trade near an all-time low if adjusted to inflation after a decade of meteoric rises in output which made the US one of the top oil and gas exporters.

Prices of gas in Europe also fell steeply despite a drop in Russian supplies after the US and Qatar helped replace lost volumes.

Despite the price drop, all leading gas producers, including the US, Australia and Russia, want to increase output betting on further demand growth and worries that their gas might not be needed decades from now if the energy transition makes green energy cheaper.

The latest expansion may not be the last for the Gulf energy giant as al-Kaabi said appraisal of Qatari gas reservoirs would continue and production would be further expanded if there is a market need.

On partnerships for the new trains, al-Kaabi said QatarEnergy will go ahead and begin the engineering phase of this project on its own without seeking partners and then take a decision on partnerships later.

The North Field is part of the world’s largest gas field, which Qatar shares with Iran, which calls its share South Pars.