Qatar Seeks LNG Buyers, Leveraging Energy Supply Fears in Europe

Qatar needs buyers for two-thirds of the supply from its liquefied natural gas expansion projects, as it leverages growing fears over energy security to nail down more long-term deals.

(Bloomberg) — Qatar needs buyers for two-thirds of the supply from its liquefied natural gas expansion projects, as it leverages growing fears over energy security to nail down more long-term deals.

The Middle East gas giant has signed two super-long contracts over the past year with partners TotalEnergies SE and China’s Sinopec. But other shareholders in the two-field expansion — including Shell Plc, Exxon Mobil Corp. and Eni SpA — have yet to announce volumes, with LNG deliveries starting from 2026.

The decades-long deals preferred by Qatar — which vies with the US as the world’s top LNG supplier — have become more attractive after Russia’s invasion of Ukraine upended energy markets and prompted European nations to prioritize security of supply over green targets. The 27-year contract announced last week by TotalEnergies means that France will continue using the fossil fuel beyond 2050.

“There is still a hell lot to sell, but there is progress,” said Anne-Sophie Corbeau, a researcher at the Center on Global Energy Policy at New York’s Columbia University.

Qatar is expected to increase its LNG-producing capacity by 64% to 126 million tons a year by 2027. Gas price volatility is burnishing the appeal of that output, although some buyers prefer the more flexible delivery terms of LNG from the US, which played a crucial role in filling the hole left by Russian pipeline flows in Europe last winter.

Qatar has so far contracted out about a third of its new capacity, announcing 15.3 million tons of annual LNG deals with China, Germany, Bangladesh and France. However, the so-called North Field East expansion is slated for 32 million tons per year, while the extension dubbed North Field South will bring another 16 million tons a year.

Out of two-phase expansion, international companies are entitled to as much as 12 million tons a year, the equivalent of a US-sized LNG project. QatarEnergy will hold 75% equity in both phases.

Five international majors have been selected for North Field East: Shell, TotalEnergies SE, ConocoPhillips, Eni and Exxon Mobil. Shell, TotalEnergies and ConocoPhillips have been selected for the smaller North Field South phase.

Shell declined to comment. Spokespeople for Eni and Exxon were not immediately available for comment.

Qatar has also booked regasification capacity in the UK, France and Belgium until 2050, also reserving import terminal space in Belgium and France and holding stakes in facilities in Italy and Britain. QatarEnergy also needs European LNG receiving terminals for its volumes from the planned Golden Pass LNG project in the US. In 2020, it set up a trading arm to build a portfolio of third-party and own equity LNG.

On top of that, the state-owned company is re-marketing volumes from older contracts that are nearing expiry. That includes about 13 million tons a year of deals — mostly with trading companies — sending LNG to Europe, which expire in 2028, according to Corbeau.

“The big question is whether the large deals which will be expiring over the next few years will indeed expire, or be extended,” she said. 

Competition for the buyers is heating up. The US now holds a 43% share of Europe’s LNG market, followed by 16% by Qatar, according to BMI Research, a Fitch Solutions company.

“Qatar will face an uphill task to expand market shares in Europe’s LNG market since US producers are chasing to secure long-term supply agreements with importers who are seeking to reduce dependence on Russian gas,” BMI said.

Qatar’s Expiring Contracts 

–With assistance from Elena Mazneva.

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