28 Sep

Qatar Petroleum to further boost North Field output with new LNG train

first_imgSaad Sherida Al-Kaabi, the president and CEO of Qatar Petroleum, said: “This new capacity increase will further strengthen our leading position as the world’s largest LNG producer and exporter, and will further boost Qatar Petroleum’s strategic growth plan.“We believe that LNG has bright prospects and that the new expansion project reflects Qatar Petroleum’s commitment to meeting its worldwide customers’ growing needs for this reliable and environmentally friendly fuel.”As for the North Field, the expansion project on the field is underway with various activities currently ongoing including the FEED of the onshore facilities, which is being executed by the Chiyoda Corporation of Japan.The engineering, procurement, construction, and installation (EPCI) contract for the offshore wellhead jackets is expected to be awarded before the end of the year, and development drilling activities are expected to begin soon. To remind, QP awarded a detailed design contract for the offshore jackets to McDermott in May.Woodmac: Good timing in cost cycle Commenting on Qatar Petroleum’s announcement, Giles Farrer, research director, global gas and LNG supply at international natural resources consultancy Wood Mackenzie said: “Since announcing the lifting of its North Field moratorium, Qatar has gradually scaled up its development plans,” said.Farrer said that Qatar Petroleum’s motivations to add the fourth LNG train were likely to be informed by a number of considerations: “Firstly, costs. With worldwide activity in the oil and gas industry still low, now is a good time in the cost cycle to invest in a new project. And there are likely to be economies of scale from developing a bigger project, particularly in light of the promising appraisal results at the North Field, mentioned by Qatar Petroleum in its announcement today. These economies of scale will make what is already the most competitive new LNG project worldwide even cheaper.”Farrer added: “Our estimate of capex for the three megatrains previously announced was around $24 billion, encompassing both the upstream and liquefaction components of the project. Qatar could probably add an additional train without significant additions to capex.“However, making sure megaprojects are delivered on time and on budget will be a huge undertaking. Another consideration is market share,” he said.“Since Qatar announced its initial plan, the market environment has improved. Forecasts of future oil prices are higher and forecasts of future LNG demand have grown stronger, particularly in Europe and China. Having already taken the decision to compete for LNG market share, Qatar is doubling down, making sure that it will be fully able to benefit from LNG market upside.“Further, one of Qatar’s major competitors for new supply development – US LNG – is currently engaged in a tariff war with China, the world’s largest growth market for LNG. Qatar could see this as an opportunity. It has recently signed a contract doubling the volumes that it will sell to PetroChina and is likely to be looking at further opportunities to supply the Chinese market.”Farrer said: “As we have previously noted, by front-loading development of its huge hydrocarbon reserves now, Qatar is also responding to the growing pace of decarbonization, which represent a threat to long-term demand for oil and gas.“On top of this, Qatar is keen to further its growth ambitions outside of the country. Qatar Petroleum has publicly indicated it is in discussions with a range of players about the expansion. Qatar Petroleum’s chief executive Saad Sherida al-Kaabi previously called this a ‘beauty parade’.“As part of those partnership discussions, we believe Qatar is expecting these companies to provide access to other discovered resource opportunities around the world. Another train could mean another partnership opportunity, furthering Qatar Petroleum’s international growth ambitions. We expect partner selection for the megaprojects to be completed sometime in summer 2019.” Qatar Petroleum (QP) has decided to increase the capacity of Qatar’s LNG expansion project, announced last year, by adding a fourth liquefaction train.QP said on Wednesday that Qatar’s LNG production capacity would reach 110 million tons per annum (MTA) following the completion of the project. This will represent an increase of around 43 percent from its current production capacity of 77 MTPA.Namely, QP started a project to develop additional gas from the offshore North Field and build three new LNG mega trains. The North Field, considered to be one of the largest gas fields in the world, is located in the Persian Gulf, and is shared between Qatar and Iran. Iran’s part of the field is known as South Pars gas fieldFollowing the good results obtained through additional appraisal and testing, Qatar Petroleum has said it will add a fourth LNG mega-train and include it in the ongoing front-end engineering of the project.When the project is completed, and all four new trains are online, Qatar’s LNG production capacity will reach 110 MTPA. This will increase the country’s total production capacity from 4.8 to 6.2 million barrels of oil equivalent per day.With the addition of the fourth train, the new project will produce about 32 MTA of LNG, 4,000 tons/day of ethane, 260,000 barrels/day of condensate, and 11,000 tons/day of LPG, in addition to approximately 20 tons per day of pure helium.center_img Related: Qatar to boost gas production from giant offshore fieldlast_img read more