Eni wins stake in $29bn Qatari project as gas prices surge
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Eni wins stake in $29bn Qatari project as gas prices surge

Eni wins stake in $29bn Qatari project as gas prices surge

The Italian company will take a 3.1 per cent a stake in the project

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Eni became the second foreign firm to win a stake in a $29bn project that will expand Qatar’s production of liquefied natural gas as the energy crisis in Europe escalates and prices climb.

The Italian company will take a 3.1 per cent a stake in the project, QatarEnergy chief executive officer Saad Al-Kaabi said at a signing ceremony in Doha on Sunday. The project will include four new liquefaction units, or trains, that will raise Qatar’s annual LNG-production capacity to 110 million tons by 2026 from 77 million.

Demand for LNG has surged as European nations race to wean themselves off Russian gas supplies in the wake of the Ukraine crisis. Prices climbed to a 14-week high on Thursday after Gazprom reduced supplies via its biggest pipeline link to the continent, making gas rationing a real possibility in Europe.

At the signing ceremony, Eni CEO Claudio Descalzi said Europe needs to diversify its energy sources, both in terms of its suppliers and the types it uses.

QatarEnergy is scheduled to announce another investor in the project on Monday, having last week named TotalEnergies as a 6.25 per cent stakeholder in the facility known as North Field East.

Read: TotalEnergies wins stake in $29bn Qatari gas project

China’s Sinopec and China National Petroleum Corp. are expected to invest along with Exxon Mobil Corp. and ConocoPhillips. Shell also bid to be part of the expansion.

Al-Kaabi previously said QatarEnergy aimed to find investors for around 30 per cent of the expansion project. The state-run company holds stakes in all of Qatar’s previous LNG developments – ranging in size from 63 per cent to 70 per cent – with international oil majors and key LNG buyers owning the rest.

While Exxon Mobil, ConocoPhillips, TotalEnergies and Shell have all previously invested in Qatar’s gas and LNG projects, Eni’s participation in the North Field East project is the Italian firm’s first in Qatari oil and gas production.

Qatar intends to announce partners for a separate expansion, known as North Field South, early next year and it will increase capacity to 126 million tons a year, said Al-Kaabi on Sunday. He previously said QatarEnergy would select partners by the end of 2022. The company is also considering further expansions due to global demand growth for LNG, Bloomberg has reported.

Having dominated the global LNG market for several years, Qatar lost ground to Australia and then to the US, which is poised to become the world’s biggest producer this year. Despite the addition of North Field East, Qatar will remain the second-largest LNG exporter in 2028 behind the US, according to BloombergNEF.

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