Qatar sanctions $29bn NFE project but issues LNG price warning

Qatar Petroleum CEO Saad al-Kaabi  Saad al-Kaabi NFE – Qatar’s North Field East Project and potentially the largest LNG development in the world – was given the go-ahead this week by Qatar Petroleum (QP) as the tiny hydrocarbon-rich Gulf nation moves ahead with plans to raise its annual production by 40% within 4 years. Expected to cost $28.75bn and scheduled to start production in the fourth quarter of 2025, the NFE will increase Qatar’s LNG production capacity from 77 million tons per annum (mmtpa) to 110 mmtpa.

While the law of supply and demand would suggest that the prospect of new LNG supplies from NFE coming onto the market should dampen prices, the state-owned QP’s CEO Saad al-Kaabi warned that prices could initially go up. Years of abundant US shale gas and oil growth had turned fossil fuels into a buyers’ market with producers shelving investment in growth and export projects in favour of maintaining market share by discounting prices, he argued.

US Shale refinery“If buyers don’t secure long-term deals… they will see spikes every winter and they will pay a hefty price,” he told the Financial Times in the wake of the NFE news. “I might be wrong and everybody does their LNG projects and there’s too much supply. But at least for the next two years, you read the plans of the majors and everybody has pulled back from a lot of projects.” He went on to predict that “at least half” of proposed global LNG projects scheduled to start in the coming years “would not happen”.

QP also unveiled plans for a CO2 capture and sequestration (CCS) system as part of the project and said that “a significant portion of the project’s electrical power needs will be provided from Qatar’s national power grid,” as well as solar power procured under corporate deals. The project will also recover 75% of the plant’s tertiary water, conserving 10.7 million cubic meters of water per year, QP said..