Qatar signs 27-year LNG supply agreement with France

Deliveries are expected to start in 2026

The TotalEnergies Cape Ann LNG terminal anchored in the English Channel off the northern French port city of Le Havre. AFP
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Affiliates of QatarEnergy and TotalEnergies have signed two sale and purchase agreements for the supply of up to 3.5 million tonnes of liquefied natural gas a year to France.

The LNG will be shipped to the Fos Cavaou LNG terminal in southern France, with deliveries expected to start in 2026 for a term of 27 years, Qatar's state-owned energy company said on Wednesday.

The 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.

“These two new agreements … demonstrate our continued commitment to the European markets in general, and to the French market, thus contributing to France’s energy security,” said Saad Al Kaabi, Qatar’s Minister of State for Energy Affairs.

“Our commitment to ensure continued and reliable supplies of energy to Europe and the rest of the world is underpinned by our substantial and continuing investments across the entire gas value chain,” said Mr Al Kaabi, who is also the chief executive of QatarEnergy.

TotalEnergies’ partnership in the North Field LNG Expansion Projects is made up of a 6.25 per cent share in the NFE project and a 9.375 per cent share in NFS.

Competition for LNG increased after Russia's invasion of Ukraine last year, with Europe importing record volumes of the supercooled fuel to replace Moscow's gas supplies.

Global LNG trade hit a high of $450 billion in 2022 amid a surge in European demand, according to the International Energy Agency.

In June, QatarEnergy and China National Petroleum Corporation entered into a 27-year agreement for the delivery of four million tonnes of LNG per year.

QatarEnergy signed a similar deal with China Petroleum & Chemical Corporation, or Sinopec, in November.

The state-run energy company has also signed sales and purchase agreements with ConocoPhillips to deliver up to two million tonnes per annum of LNG to Germany.

Qatar, one of the world's largest LNG exporters, is looking to raise its production capacity to 126 million tonnes per year by 2027.

Global natural gas demand is set to slow in the coming years amid declining consumption in mature markets due to an “accelerated” roll-out of renewables and improved energy efficiency, the IEA said this week.

Demand is projected to grow by 1.6 per cent a year between 2022 and 2026, down from an average of 2.5 per cent a year between 2017 and 2021, the agency said in its Gas 2023 Medium-Term Market Report.

China, the world’s second-largest economy, is set to account for about half of the total growth in demand until 2026 as it uses the fuel for industrial production and power generating, the report said.

Updated: October 11, 2023, 12:36 PM