Qatar, France sign LNG supply deal beyond 2050: Update

Adds information about potential minimum delivery obligations to Fos Cavaou

State-owned QatarEnergy (QE) and France's TotalEnergies have signed two 27-year supply agreements for up to 3.5mn t/yr of LNG, starting in 2026, making France the first European country to purchase gas well beyond 2050.

The LNG "will be delivered ex-ship to the Fos Cavaou LNG receiving terminal in southern France", QE said today.

Volumes will be sourced from the two joint ventures between QatarEnergy and TotalEnergies that hold interests in Qatar's North Field East (NFE) and North field South (NFS) projects, according to QE.

But it remains unclear if there is a minimum delivery obligation to France. QatarEnergies has long-standing flexible supply arrangements into Europe with no minimum delivery obligation. These give the firm something akin to a put option that it can use to deliver uncommitted LNG cargoes to Europe after meeting delivery obligations to customers elsewhere who have contractual flexibility to adjust their offtake. These arrangements include an agreement to deliver up to 3.4mn t/yr of LNG (4.5bn m³/yr regasified) to EdF at Belgium's 7.2mn t/yr Zeebrugge facility, a deal for up to 2mn t/yr with UK utility Centrica at the UK's 14.8mn t/yr Isle of Grain terminal, and a marketing arrangement with ExxonMobil at the UK's 15.6mn t/yr South Hook terminal. QatarEnergies owns 70pc of South Hook, while ExxonMobil owns 30pc — the same split as their ownership of the under-development Golden Pass export facility in the US.

TotalEnergies holds a 6.25pc stake at NFE and 9.375pc at NFS. ExxonMobil also holds a 6.25pc stake in Qatar's NFE.

"The agreements we have signed… demonstrate our continued commitment to the European markets in general, and to the French market in particular, thus contributing to France's energy security," Qatari energy minister and QE chief executive Saad al-Kaabi said. "Qatar has been supplying the French market with LNG since 2009."

Al-Kaabi said in January that the 48mn t/yr NFE and NFS projects will be sold out potentially by the end of this year, with buyers in Asia-Pacific aware that there is a pull from Europe — "2023 is going to be a very big year for Qatar," he said. "A lot of things are going to be announced."

QE and Chinese state-run CNPC signed another 27-year supply agreement for 4mn t/yr of LNG in June.

The deal was the third offtake agreement for LNG from NFE. QE's first two supply agreements at 32mn t/yr NFE were a 27-year, 4mn t/yr agreement with Sinopec and a 15-year, 2mn t/yr deal with ConocoPhillips for delivery to Germany.

It is unclear whether a June deal with Bangladesh's state-owned Petrobangla to supply 1.8mn t/yr over 15 years will use NFE supply, LNG from NFS, or draw cargoes from existing facilities. The 16mn t/yr NFS expansion is due on line in 2027 and will increase Qatar's liquefaction capacity to 126mn t/yr.

By Bachar Halabi