Qatar Takes FID on NFE Project
Qatar Petroleum has taken the final investment decision for developing the North Field East project (NFE), the world’s largest LNG project, which will raise Qatar’s LNG production capacity from 77mn metric tons/year to 110mn mt/yr, it said on February 8.
The project is expected to start production in the fourth quarter of 2025. Qatar Petroleum has awarded the key onshore engineering, procurement and construction (EPC) contract to a joint venture between Chiyoda Corp and Technip Energies. QP said it was close to agreeing the front-end engineering and design of the onshore facilities to Chiyoda in April 2019.
The main scope of the EPC contract is the construction of four mega LNG trains with a capacity of 8mn mt/yr each, with associated facilities for gas treatment, natural gas liquids recovery, as well as helium extraction and refining within Ras Laffan Industrial City.
“The execution of this EPC contract marks the commencement of the construction of the North Field East LNG project, and is a significant landmark in Qatar Petroleum's strategic growth journey in a sustainable manner,” company CEO Saad al-Kaabi said. The total cost of the NFE project will be $28.75bn.
Al-Kaabi said that one of the most important environmental elements of the NFE project is its CO2 capture and sequestration (CCS) system that will be integrated with the wider CCS scheme in Ras Laffan.
Renewable energy will also play a major part in the plants' electricity supplies and there will be a jetty boil-off gas reliquefaction plant which will help reduce greenhouse gas emissions (GHG) by about 1mn mt/yr of CO2 equivalent. Methane leakage and carbon emissions are obstacles for LNG exporters looking for markets in regions such as Europe, where Qatar has booked long-term LNG import capacity. The European Union is considering a border tax on carbon.
Wood Mackenzie research director Giles Farrer said that at a long-term breakeven price of just over $4/mn Btu, NFE project is right at the bottom of the global LNG cost curve, alongside Arctic Russian projects.
"Qatar is pursuing market share. This FID is likely to put pressure on other pre-FID LNG suppliers, who may find Qatar has secured a foothold in new markets," Farrer said. "As long-term contracts to sell LNG from some of its existing projects expire and Qatar adds new capacity from North Field East and Golden Pass in the US, Qatar is going increasingly long on volume."
WoodMac estimates Qatar will have over 75mn mt/yr of uncontracted LNG volume to sell by 2027, around 70% of its LNG portfolio. "Qatar's decision to construct a carbon capture and storage facility, as well as additional environmental investments, shows that LNG suppliers are increasingly putting focus on ways that they can mitigate their carbon emissions," Farrer said.
The NFE project represents the first phase of LNG expansion in Qatar, while the second phase, referred to as the North Field South project (NFS), will further increase Qatar’s LNG production capacity from 110mn mt/yr to 126mn mt/yr.
With an expected production start date in 2027, the NFS project involves the construction of two additional mega LNG trains with a capacity of 8mn mt/yr each and associated offshore and onshore facilities.