Total and others maneuvering for Qatar LNG projects

by Ron Bousso

LONDON (Reuters) – When Royal Dutch Shell wanted to acquire a stake in a promising exploration block off South Africa, it ran into Total, which exercised its right of first refusal on this asset, resold in the wake of Qatar Petroleum (QP).

The maneuver of the French group, whose details had never been revealed before, surprised some of the actors involved in the case, according to sources close to the operation.

In fact, Total's decision is part of a broader attempt to strengthen its ties with QP in order to take a stake in Qatar's liquefied natural gas (LNG) expansion projects, which holds the largest LNG deposits. one of the most lucrative products in the energy sector.

These projects are coveted by other industry majors like Exxon Mobil and Shell, who have also offered QP stakes in some of their most popular assets.

Newcomers like Chevron, Equinor and Eni also hope to take part in these projects, according to sources.

Energy groups consider natural gas, the least polluting hydrocarbon, to be an essential resource in the transition to a lower carbon economy.

Liquefied gas is easily transportable to countries such as India, China and Japan, and demand is expected to surge in the coming decades.

Qatar's LNG sites, in which Total already holds a stake, as well as Shell, Exxon and ConocoPhillips, provide investors with access to vast resources at lower production costs.

"This is an important part of the gas reserves, so if you can buy or participate in these projects, it could help (businesses) at the reserve level," says Jason Feer, head of business intelligence at Poten & Partners Consulting.

LNG PRODUCTION OF 110 MILLION TONS PER YEAR

QP wants to increase its LNG production to about 110 million tonnes per year (mtpa), up from 77 million tonnes in the next five years, by building four new production sites.

Qatar's oil and gas company is expected to announce its partners in the near future, industry sources said.

Since the sale of the South African stake in QP, Total has entered into other transactions with the Qatari group.

The French giant announced Tuesday the signing of several agreements with Qatar Petroleum to transfer shares in assets in Namibia, Guyana and Kenya.

"We have been in Qatar for 80 years and believe that this long-term relationship has been successful for both Qatar Petroleum and Total," the French group told Reuters.

Last October, Patrick de La Chevardière, the Chief Financial Officer of Total, emphasized the issue of the file by stating that the major would be "disappointed if (she) did not participate in LNG development projects in Qatar".

(with Gary McWilliams in Houston, Nia Williams in Toronto, Bate Felix in Paris, Stephen Jewkes in Milan and Eric Knecht in Dubai, Claude Chendjou for French Service, edited by Jean-Michel Belot)