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Qatar partners with energy majors to expand world’s largest LNG project

05 July 2022

QatarEnergy announced on July 5 that it has signed a deal with Shell as part of the North Field East expansion project, the single largest project in the history of the liquefied natural gas (LNG) industry. Shell joins Exxon, TotalEnergies, ConocoPhillips, and Eni in partnering with state-owned QatarEnergy for the planned expansion at the world's largest gas field.

Representative image: Shutterstock
Representative image: Shutterstock

Shell, TotalEnergies, and Exxon will all hold a 6.25% stake in the nearly $30 billion expansion project that will see Qatar strengthen its position as the world’s top LNG exporter. The energy majors involved in the first phase of the expansion were bidding for four LNG trains at the facility which comprise the North Field East project.

The full expansion plan involves six LNG trains in total that will take Qatar’s liquefaction capacity from 77 million tonnes per annum (mtpa) to 126 mtpa by 2027. The two remaining trains comprise the second phase of the expansion project, North Field South. QatarEnergy has said that talks with several buyers from around the world.

The announcement of Shell’s partnership with QatarEnergy came as Russia said it would be seizing control of one of the world’s largest LNG projects, Sakhalin-2. Shell, which has a 27.5% stake in the project, has been in talks with potential buyers for several months since it announced it would exit Russia in the aftermath of the invasion of Ukraine.

Russian President Vladimir Putin signed a decree on June 30 which could force Shell, as well as other investors such as Japan’s Mitsui and Mitsubishi, to abandon its investment. The decree states that a new Russian-owned company would take over all rights and obligations involved in the Sakhalin-2 project.

Sakhalin-2 supplies around 4% of the world’s LNG and is 50% owned by Gazprom. The decree says that Gazprom would keep its stake, but other shareholders would need to request permission from the Russian government within one month in order to keep their stakes in the project. The government will then decide if the shareholder would be allowed to keep its stake.

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