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Sinopec acquires stake in Qatar’s North Field East LNG

13 April 2023

QatarEnergy has announced selling a five per cent stake in its North Field East (NFE) liquefied natural gas (LNG) production project to China Petroleum & Chemical Corporation (Sinopec).

The NFE stake transferred to Sinopec is the equivalent of one LNG train with a capacity of 8 million tonnes a year (t/y), QatarEnergy said in a statement on 12 April, after signing the shareholder agreement with the Chinese state-owned company in Doha. The value of Sinopec’s stake was not disclosed.

Sinopec becomes the first Chinese stakeholder in the NFE project, which would have four LNG trains, with a capacity of 8 million t/y each. When commissioned, expectedly in 2025, the NFE scheme would increase Qatar’s LNG output to 110 million t/y by 2025 from its existing capacity of 77.5 million t/y.

The other foreign stakeholders in the NFE project are France’s TotalEnergies (6.25 per cent), Italian energy company Eni (3.125 per cent), US oil and gas producers ConocoPhillips (3.125 per cent) and ExxonMobil (6.25 per cent), and UK/Netherlands-based Shell (6.25 per cent). These Western energy companies have collectively invested over $7bn.

Following the latest stake divestment to Sinopec, QatarEnergy retains the majority 70 per cent stake in the NFE project, billed as the single largest project in the history of the LNG industry.

 

QatarEnergy’s stake sale agreement with Sinopec, follows a major LNG supply deal that it secured with the Chinese firm in November last year – to provide 4 million t/y of LNG for a duration of 27 years.

Prior to that sale and purchase agreement (SPA), QatarEnergy secured SPAs with two Chinese companies in March 2021 for the supply of 2 million t/y – 1 million t/y each to Guangdong Energy Group Natural Gas Company Limited and S&T International, for periods of 10 and 15 years, respectively.

North Field East LNG scheme

Launched in 2017, the NFE project constitutes the first phase of QatarEnergy’s $28.75bn North Field LNG expansion project. As well as an LNG output of some 32 million t/y, NFE will produce 4,000 tonnes a day (t/d) of ethane as feedstock for future petrochemical developments, 260,000 barrels a day (b/d) of condensates, 11,000 t/d of liquefied petroleum gas (LPG) and 20 t/d of helium.

The engineering, procurement and construction (EPC) works on the NFE project were divided into six packages – four onshore and two offshore, and are currently progressing.

QatarEnergy awarded a massive $13bn contract for NFE package 1 to a consortium of Chiyoda and TechnipEnergies on 8 February 2021. The package covers the EPC of four LNG trains, with each train planned to have an output capacity of about 8 million t/y. In turn, the Chiyoda/Technip Energies consortium awarded CCC a $2.3bn sub-contract in July 2021 to execute a significant share of their work on the NFE main package.

In March 2021, QatarEnergy awarded South Korea’s Samsung C&T Corporation a $2bn contract for executing EPC works on the second NFE package. This will expand the LNG storage and loading facilities in Ras Laffan Industrial City (RLIC).

In August of that year, QatarEnergy awarded the third NFE package to Spanish contractor Tecnicas Reunidas. The scope of work on the package covers EPC works to expand the storage and loading facilities for condensates, propane and butane and increase the import facilities for mono-ethylene glycol within RLIC.

A 70:30 joint venture of Tecnicas Reunidas and China’s Wison Engineering won the $600m EPC contract for the fourth NFE package in April 2022, related to the building of sulphur handling, storage and loading facilities.

ALSO READ: Saad al-Kaabi retains grip on Qatar’s energy affairs

Looking ahead, QatarEnergy is preparing to award the main EPC contracts for the North Field South (NFS) project – the second phase of Qatar’s mammoth LNG capacity expansion programme. The NFS project would have two LNG trains, with a capacity of 7.8 million t/y each, further increasing QatarEnergy’s LNG production capacity to 126 million t/y when commissioned in 2028.

QatarEnergy has also completed the selection process for international partners in the NFS project. Out of the 25 per cent share available for foreign stakeholders, TotalEnergies and Shell have won 9.375 per cent stakes each, while ConocoPhillips has secured a 6.25 per cent stake.

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Indrajit Sen

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