Qatar has embarked on the expansion of the giant North Field in its quest to retain its status as a global market leader in liquefied natural gas.

Experts believe the two phases of North Field Expansion are together likely to be worth up to $50 billion, and would place Qatar among an elite list of LNG producers in the long term.

The emirate sees gas as a transition fuel and maintains that its LNG industry can function with a relatively low carbon footprint.

The North Field Expansion will incorporate “various emission-mitigation measures, such as power from renewables and a large carbon capture and storage facility”, according to Ian Thom, research director with Wood Mackenzie.

Thom said either the US or Qatar is likely to emerge as the leading global LNG supplier in the future.

“They will both stretch well ahead of Australia as new projects are commissioned this decade,” he said.

Qatar currently has a nameplate liquefaction capacity of 77 million tonnes per annum — behind Australia's nearly 88 million tpa, although there is far less of a gap between the two nations' LNG export levels.

Thom added that Qatar and Australia were neck and neck last year in LNG production volumes, each producing close to 79 million tonnes in 2020.

Qatar is adapting a phased approach for the North Field Expansion and has already sanctioned the first phase this year, valued at close to $29 billion.

Qatar Petroleum (now QatarEnergy) signed a $13 billion deal earlier this year with a pairing of Chiyoda and Technip Energies for engineering, procurement and construction work on liquefaction facilities for the first North Field Expansion phase.

The Chiyoda-Technip Energies joint venture will work on up to four liquefaction trains, each with a capacity of 8 million tpa.

The first expansion phase, North Field East, will increase Qatar’s liquefaction capacity to 110 million tpa by the middle of this decade, giving it a much stronger foothold in key gas-consuming markets in the Asia Pacific region.

In the second phase, North Field South, Qatar aims to further ramp up liquefaction capacity to 126 million tpa by 2027.

Qatar is expected to reach a final investment decision for this phase in the first half of 2022, Upstream understands.

As spot LNG prices continue to climb to record highs — and with experts predicting robust global gas demand in coming years, led by Asian countries — Qatar is expected to continue pumping billions of dollars into further expanding its liquefaction capacity.

Strategic projects

Higher oil prices are also expected to support continued investments by Qatar and other Middle East nations in strategic oil and gas projects.

“We are already seeing a rebound in oil and gas investment in UAE, Qatar and Saudi Arabia. Higher oil prices make budgeting for and approving new investment projects much easier,” said Thom.

Rystad Energy Middle East upstream analysis vice president Aditya Saraswat said the investment is in keeping with the country's "transition fuel" approach.

“Qatar’s transition strategy involves a portfolio with 90% gas production by 2030,” he said.

“We see that the ongoing North Field expansion plans support the country’s ambitions.”

Saraswat added that Qatari LNG expansion is highly competitive and is expected to deliver LNG at breakeven prices of around $4 per million British thermal units to $4.5 per million Btu, the “lowest when compared against upcoming projects globally”.

“With significant remaining resources in the North Fields, these expansion projects give Qatar a competitive cost advantage in the global LNG markets,” he said.

Qatar’s LNG expansion is based not just on long-term market predictions or speculation. The Emirate inked multiple offtake agreements this year, guaranteeing a safe haven for its incremental LNG capacity likely to come onstream over the years.

Several LNG deals have been signed by Qatar with Asian energy giants, repositioning the nation as a reliable long-term LNG supplier.

QatarEnergy chief executive Saad Sherida al Kaabi has said the company has initiated a bid process for dishing out stakes in the first phase of the North Field Expansion to foreign players.

The stake sale process is expected to whet the appetite of international giants such as ExxonMobil, Chevron and ConocoPhillips, along with other international players that could be involved in the bid process, industry sources told Upstream.

However, as gas prices continue to climb, some experts argue that it makes economic sense for Qatar to proceed with the the North Field expansion on its own.

Contractors chase billions in Qatari jobs

Qatar has emerged as the most lucrative market in the Middle East region for international engineering, procurement and construction players, offering billions of dollars of work involving its giant North Field.

Multiple EPC projects are in the tendering stage, primarily involving the two phases of the North Field Expansion and the North Field Sustainability programme, which also involves giant offshore compression facilities.

Qatargas is the QatarEnergy subsidiary overseeing the emirate's major expansion and production sustainability plans for the North Field.

QatarEnergy this year dished out multiple onshore packages involving the first expansion phase of the giant gas field, North Field East (NFE), and is expected to finalise key offshore tenders for the NFE project within months.

Last year, Qatargas issued the tenders for NFE's two offshore packages that are likely to be finalised soon, according to project watchers.

The first package comprises topsides for at least eight new unmanned wellhead platforms.

Up to five additional wellhead topsides meant for North Field South (NFS), the second expansion phase, could also be included as an option, Upstream has learned.

Along with the topsides packages, contractors are also battling it out for a second NFE package that involves subsea pipelines.

This includes the EPCI of more than 500 kilometres of subsea pipelines and up to 300 kilometres of subsea cables.

Qatargas has initiated the chase for a separate offshore contract for the NFS project, recently inviting bids for up to five offshore jackets, as Upstream reported earlier.

Qatar is expected to float multiple tenders for NFS, giving the expansion project's second phase momentum.

Along with expansion plans, Qatar is also spending billions of dollars on the North Field sustainability programme aimed at maintaining the production profile of the giant gas field.

Saipem earlier landed two sizeable offshore contracts for work on the programme.

In addition, the operator has kicked off work on the massive North Field Production Sustainability compression project.

The long-term plan for the project calls for at least seven compression platforms tendered across four phases in the next few years.

Three contracts are up for grabs in the first phase, which also includes two massive offshore compression "super-complexes".

TechnipFMC — working before the spin-off of TechnipEnergies — carried out the front-end engineering and design work for the offshore compression scheme.