The first phase of the project is set to commence in 2026
B2B and B2G multinationals can expect to see sustained demand in the medium term as growth in Qatar’s hydrocarbons sector boosts overall GDP in the medium term, offsetting slower growth in non-energy sectors such as tourism. This will allow Qatar to maintain a robust fiscal balance in the coming years, with the government likely to take advantage of an improved fiscal space and drive growth in CAPEX on strategic projects in sectors such as infrastructure, manufacturing, and ICT.
Overview
Qatar has made significant progress in 2023 as part of ongoing efforts to secure buyers for its North Field expansion project, which is set to commence in 2026 and will raise Qatar’s LNG production capacity from 77 million mt/year to 126 million mt/year. The project entails the construction of six new mega trains, each with a production capacity of 8 million mt/year. The North Field East expansion is set to provide 32 million tons per year, while the North Field South will bring another 16 million tons a year.
Construction officially began in October 2023, with several long-term agreements signed within the same month, some of which include:
- Total Energies and Qatar signed a 27-year agreement whereby Qatar will supply up to 35 million tonnes of LNG to France (per year) starting 2026.
- QatarEnergy and Shell have signed two long-term LNG agreements for the supply of 3.5 million tons of LNG a year to Rotterdam’s Gate import terminal for 27 years.
- Eni and QatarEnergy signed a long-term deal, starting in 2026, whereby Qatar Energy will supply up to 1 million mt/year starting.
QatarEnergy has also signed several deals with Asian buyers. These include a 27-year deal with China’s Sinopec, whereby Qatar will supply 3 million metric tons of LNG per year to Sinopec in the second phase of the project, marking the third long-term supply deal between Sinopec and Qatar Energy. Other deals include a 15-year deal with both Bangladesh’s Petrobangla and Thailand’s Public Company Limited (PTT).
QatarEnergy reported a $42.47 billion net profit for 2022, a 58% YOY increase, with earnings increasing on higher revenues from its share of profits from associates and joint ventures.
Qatar’s energy minister stated that QatarEnergy will contribute 40% of all new LNG to the market by 2029.
Our View
Qatar’s global position as an LNG exporter will grow in the coming years. Asia will remain critical to the country’s long-term LNG export strategy. While securing European buyers had initially proven difficult due to Qatar’s stricter contract terms, there has been a clear shift toward Qatari LNG amid dwindling Russian supply. Despite this, several risks remain. Qatar will face challenges in expanding further market share in Europe’s LNG market as US producers race to secure long-term supply agreements, with the latter offering more flexible contract terms. Other downside risks include lower global demand for gas, dampening prices.
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