From the moment that Russia invaded Ukraine on 24 February 2022, liquefied natural gas (LNG) became the key global emergency energy source. Unlike pipelined energy that requires time-consuming infrastructure build-out and contract negotiations before it can be moved anywhere, LNG can be bought in the spot market when required and move swiftly to wherever it is needed. As increasing sanctions have hit Russia’s previously enormous global oil and gas exports, LNG’s crucial importance to the world’s energy balance has increased. Against this backdrop, the centrality of the small Middle Eastern emirate of Qatar in the global energy market has dramatically increased and is set to do so further. Its geopolitical significance is further boosted by the fact that it shares its key gas reservoir with neighbouring Iran. Consequently, last week’s awarding of a huge contract to expand LNG production at this key site has been closely scrutinised by the world’s major powers.
Qatar’s positioning in the months before Russia moved into Ukraine gave the impression that Doha was edging closer to the emerging China–Russia axis. The signal came through a burst of long-dated LNG supply agreements with Chinese buyers, with the first landing in March 2021, when Sinopec and Qatar Petroleum agreed a decade-long deal for 2 million mtpy of LNG. Another followed that December, this time between QatarEnergy and Guangdong Energy Group Natural Gas Co., covering 1 million mtpy from 2024 through 2034, with scope for extension. Several similarly weighty contracts were signed in quick succession. Beijing and Moscow had long assumed Qatar might lean their way, not least because the emirate jointly straddles the world’s largest gas reservoir — the North Field/North Dome on Qatar’s side and South Pars on Iran’s — with Tehran, a strategic partner of both powers. This 9,700 square kilometre reservoir was, and remains, by far the biggest gas resource in the world, holding an estimated 51 trillion cubic metres (tcm) of non-associated natural gas and at least 50 billion barrels of natural gas condensates.
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After Washington pulled out of the Joint Comprehensive Plan of Action (JCPOA, or ‘nuclear deal’) with Iran in May 2018, senior officials from Iran’s Petroleum Ministry and Qatar’s Energy Ministry began exploring a fresh joint development framework for the shared field. The logic was straightforward: both states were founding members of the Gas Exporting Countries Forum alongside Russia, and China was the key demand anchor for all three. Around that time, highly placed security sources told OilPrice.com that Beijing had been quietly briefed by Moscow on the outlines of its planned “large-scale special operation” in Ukraine months before it unfolded — not merely in the run-up to the Beijing Winter Olympics, as widely reported. As also examined in my latest book on the new global oil market order, this raised an uncomfortable possibility for Washington: that Qatar’s deepening LNG ties with China might have helped cushion Beijing against the supply shocks and price spikes unleashed by the 2022 invasion.
Qatar soon found itself squeezed by intensifying pressure from Washington, London, and Paris to cool its deepening energy courtship with China and pivot towards long-term supply commitments with Europe instead, above all with Germany, the European Union’s (E.U.’s) economic centre of gravity. In the U.S., U.K., and French circles, Berlin’s reluctance to meaningfully cut its dependence on cheap Russian hydrocarbons after the 2014 annexation of Crimea had long been viewed as a key factor in Russian President Vladimir Putin’s calculation that a full-scale assault on Ukraine in 2022 would again carry limited consequences. With that backdrop, Western governments began leaning heavily on Doha to redirect future LNG flows towards Europe. By late March 2022, this pressure had crystallised into a series of high-level engagements between Qatar and senior Western officials aimed at securing emergency LNG volumes for the transatlantic alliance. After one such meeting — involving Qatar’s Emir Sheikh Tamim bin Hamad Al Thani, German economy minister Robert Habeck, and U.S. representation — then President Joe Biden publicly designated Qatar a “major non-NATO ally”, as also analysed in my latest book. Two months later, Qatar and Germany signed a declaration of intent on energy cooperation, laying the groundwork for Doha to become a core LNG supplier to Berlin. The momentum continued into December 2022, when QatarEnergy and ConocoPhillips finalised two long-term sales and purchase agreements to deliver LNG to Germany for at least 15 years starting in 2026. Related: China’s Rare Earth Dominance and the Strategic Failure of the West
As it now stands, Qatar will account for at least 40% of all new LNG supplies across the globe by 2029, according to recent comments from its government. These projections are in line with independent industry figures, with the huge increase in production set to come from the ongoing expansion of its North Field projects. This 6,000 square kilometre field is one part of two sites that constitute the world’s biggest gas field. The other 3,700 square kilometre section is Iran’s South Pars gas field, which accounts for around 40% of the Islamic Republic’s total estimated 33.8 trillion cubic meters (tcm) of gas reserves and about 75% of its gas production. Qatar’s North Field expansion program will see six major new developments in the North Field East (NFE) and North Field South (NFS) by 2029. Four new ‘trains’ (production facilities) – each with 8 million metric tonnes per annum (mtpa) – will be built on the NFE site, and two (with the same production capacity) in the NFS site, totalling 48 million mtpa of new LNG production. At the end of last February, QatarEnergy announced another set of projects – focused on its North Field West (NFW) – that will increase its LNG output from the current 77 million mtpa to 142 million mtpa before the end of this decade. This compares to the 404 million mtpa of LNG traded globally in 2023, and to industry estimates that this figure will reach around 625-685 million mtpa in 2040. It is with an eye on these NFW sites that Qatar very recently announced that it will very shortly sign more long-term LNG supply deals to add to the 25 million tonnes of sales secured last year.
Looking ahead, another near-13 million mtpa of LNG output for Qatar is set to come from its 70% share in the Golden Pass LNG export project that it runs alongside the U.S.’s ExxonMobil. When complete, the 18 million mtpa project in Texas is expected to be one of the largest U.S. LNG export facilities and will help the U.S. maintain its position as the world’s largest exporter of the gas. As the majority owner, QatarEnergy is responsible for 70% of the production offtake and marketing (so at least 12.6 million mtpa). According to very recent comments from the firms, the project has been pulling in around 300 million cubic feet of gas per day, with expectations being that it will start producing LNG within the coming two months. The latest huge award in Qatar’s critical North Dome expansion is to French firm Technip Energies. will cover the delivery of two mega trains, each with a capacity of 8 million mtpa of LNG, for use on the North Field West site, mirroring the firm’s earlier development of two trains for the North Field South project. Although the specific value of the contract has not been disclosed, it is believed to be over EUR1 billion in revenue. QatarEnergy has added that in addition to LNG production, the NFW project is expected to produce about 175,000 barrels of oil equivalent per day of condensate, ethane, and liquefied petroleum gas.
Taken together, these developments point to a more decisive realignment of Qatar towards the U.S. and its allies. Doha may have toyed with a move towards Moscow and Beijing in the run-up to the invasion of Ukraine, but the combination of Western pressure, Europe’s urgent need for non-Russian gas, and the deepening isolation of both Iran and Russia appears to have pulled it back into the Western strategic orbit. The emirate’s expanding LNG footprint now underpins energy security strategies in the U.S. and Europe alike, while its long?term supply commitments increasingly run westward rather than east. With Qatar poised to dominate new global LNG supply growth for the rest of the decade, its interests are now more tightly bound to those of Washington and its allies than at any point in the past 20 years — a shift that is likely to shape the geopolitics of gas well into the 2030s.
By Simon Watkins for Oilprice.com
