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Italian oil giant joins Qatar gas project after Russia cuts supplies

(AFP) – Italy’s Eni on Sunday joined Qatar Energy’s $28.75 billion project to boost production from the world’s largest natural gas field, days after Russia cut deliveries to the world. ‘Italy.

Eni will hold a stake of just over three percent in the North Field East project, the CEO of Qatar Energy said at a signing ceremony in Doha.

Qatar announced last week that France’s TotalEnergies would be its first and largest foreign development partner, with a 6.25% share.

An unknown number of companies are also expected to be named.

“Today I am pleased…to announce the selection of Eni as a partner in this unique strategic project,” said Qatar’s Energy Minister Saad Sherida al-Kaabi, who is also Chairman and CEO of state-owned Qatar Energy.

The project’s LNG – the cooled form of gas that facilitates transportation – is expected to come on stream in 2026. It will boost Qatar’s LNG production from 77 million tonnes per year to 110 million, Qatar Energy said.

The Qatari company estimates that the North Field, which extends under the Gulf Sea into Iranian territory, holds around 10% of the world’s known gas reserves.

Russia’s invasion of Ukraine has made efforts around the world to develop new sources of energy urgent as Western countries try to reduce their dependence on Russia.

On Friday, Eni said it would only receive 50% of the gas requested from Russia’s Gazprom, the third consecutive day of reduced supply. Rome has accused Gazprom of peddling “lies” about the cuts.

“We have a lot to learn from your leadership, but also from your standards and your ability to adapt to very difficult circumstances,” Eni CEO Claudio Descalzi told his Qatari counterpart.

Kaabi declined to disclose how many additional partners will be announced. “We signed with everyone. We just don’t tell you that,” he told reporters.

Further announcements are expected this week. Industry sources discussed ExxonMobil, Shell and ConocoPhillips, while Bloomberg reported that Chinese companies were in talks.

Qatar, which is one of the world’s largest LNG exporters, “shares the commercialization risks” by involving partners, said Thierry Bros, a professor at Sciences Po Paris and an energy and climate expert.

“There could also be a geopolitical vision,” he added.

South Korea, Japan and China have been Qatar’s main LNG markets, but since an energy crisis hit Europe last year, the Gulf state has helped Britain with additional supplies and also announced a cooperation agreement with Germany.

Europe has in the past rejected the long-term deals that Qatar seeks for its energy, but the war in Ukraine has forced a change in attitude.

Poland, Bulgaria, Finland and the Netherlands have had their natural gas deliveries from Russia suspended for refusing to pay in roubles.

“In the short term, we think LNG demand will be all about Europe as these European buyers look to wean themselves off Russian gas,” Daniel Toleman, an analyst at resource consultancy Wood Mackenzie, told AFP.

“But in the longer term, it’s coming back to Asia, and Qatar has a maritime advantage on these American projects and it will be able to supply Asian (customers).”

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Post expires at 12:18am on Thursday June 30th, 2022