LNG

QatarEnergy has celebrated a South Korean steel-cutting of the first of its new generation of chartered liquefied natural gas carriers that will transport output from two LNG expansions and with most of the newbuilds booked for shipyards in South Korea.

QatarEnergy said it was joined by Samsung Heavy Industries and US investment bank JP Morgan Asset Management in a special ceremony on Geoje Island in Korea to mark the official launching of QatarEnergy’s LNG fleet expansion project. 

The Doha-based company said the shipyard event signified an extension of QatarEnergy's “international collaborations and commitment to global partnerships” and follows the October 2022 steel-cutting at Hudong-Zhonghua, the Chinese shipyard to where a far smaller part of the shipbuilding contract was awarded.

The Korean ceremony was held before executives of companies involved in the project including Sheikh Khalid bin Khalifa Al-Thani, the Chief Executive of Qatargas who attended on behalf of Saad Sherida Al-Kaabi, Qatar’s Minister of State for Energy Affairs and who is also President and CEO of QatarEnergy.

Samsung was represented by Jin-Taek Jung, the CEO of SHI, and Andy Dacy, the CEO of JP Morgan's Global Transport Group, an owner of LNG carriers to support its commodities business.

Slot reservations

The steel-cutting ceremony in South Korea followed QatarEnergy's 2020 decision to enter into Ship Slot Reservation Agreements with three Korean shipyards: SHI, Hyundai Heavy Industries and Daewoo Shipbuilding and Marine Engineering.

Subsequently, in 2022, QatarEnergy signed multiple time-charter parties with various shipowners, including the shipping unit of JP Morgan Asset Management, a fund investing in a wide array of energy transportation assets.

Qatar has two expansion projects, the North Field East (NFE) joint venture and the North Field South (NFS) venture. When both are completed Qatar's production will surge to 126 MTPA from the current 77 MTPA.

The carrier fleet expansion programme is being conducted alongside and about 80 LNG vessels are being built, including the replacement of older ships in the current Qatari fleet.

The surge in LNG newbuilds for Qatar and other proejcts will take the global fleet in several years to more than 800 vessels.

The main South Korean shipbuilders won all the first big round of Qatari orders so that the vessels are ready for the start-up of the first production expansion project, the North Field East venture.

China newbuilds

Qatar has also ordered at least half a dozen new LNG carriers from the Hudong-Zhonghua Shipbuilding Group of Shanghai for the Ras Laffan expansion’s cargo transportation.

While QatarEnergy's partners in the LNG production expansions are primarily US and European energy majors, China Petroleum and Chemical Corp., the Chinese major known as Sinopec, also agreed in April 2023 to take a stake in the NFE expansion.

Sinopec had already signed a cargo supply deal with QatarEnergy in November 2022 to receive 4 MTPA of Qatari cargoes from 2026.

With a total investment of $28.75 billion, the NFE project will increase Qatar's annual LNG export volumes in the first instance from 77 MTPA to 110 MTPA.

Sinopec signed an equity participation agreement with QatarEnergy to take 1.25 percent of the shares in the NFE joint venture. 

QatarEnergy entered into a long-term sale and purchase agreement (SPA) with Guangdong Energy Group based in southern China for the supply of 1 million tonnes per annum of LNG over a 10-year period starting in 2024.

Qatar Petroleum has signed a 10-year Sale and Purchase Agreement with Royal Dutch Shell for the supply of 1 million tonnes per annum of liquefied natural gas to China.

The shipments will commence in January 2022 to various Chinese regasification terminals.

“We are pleased to enter into this new LNG SPA with our trusted partner Shell,” said Saad Sherida Al-Kaabi, Qatar’s Minister of State for Energy Affairs and the President and Chief Executive of Qatar Petroleum.

“I am especially delighted that this agreement will meet part of the demand of Shell's end customers in China, thereby further supplementing Qatar's contribution to meeting China's growing energy needs,” added Al-Kaabi.

The Qataris believe that the SPA with Shell to supply China further highlighted their ability to meet the requirements of customers and partners across the world.

“I would like to take this opportunity to thank the management and staff of Shell for the successful conclusion of this SPA, which is another testament to our long and fruitful partnership,” stated Al-Kaabi.

The Qatari Minister also thanked Sheikh Khalid Khalifa Al Thani, the CEO of Qatargas, and his team for their valuable contributions to reinforce Qatar's position in the LNG market.

Qatar plans to supply the LNG volumes contracted under this agreement from its Qatargas I venture, which will become 100 percent owned by Qatar Petroleum as of January 2022.

The Qatargas I joint venture, also comprising ExxonMobil, France’s TotalEnergies and Japanese firms Marubeni Corp. Mitsui & Co. will have been on stream for 25 years in 2022.

“China is considered a major customer for the State of Qatar and a strategic partner in the energy sector,” said the statement.

“With the conclusion of this agreement, China will be supplied with approximately 12 MPTA of LNG under long-term SPAs from Qatar,” it added.

Qatar Petroleum is in the midst preparations for LNG expansion and its various projects, including the North Field South venture, will cost around $35 billion spread over the next five years, though the Qataris will have several equity partners from the energy majors and whose names have yet to be disclosed.

The expansion of output at the Ras Laffan LNG plant will comprise the construction of four Trains for liquefaction to take the Arab Gulf state’s output from 77 million tonnes per annum up to 110 MTPA.

Qatar is additionally considering boosting capacity beyond the 126 MTPA with a future second expansion already announced.

Qatar Petroleum has entered into an agreement worth more than $3 billion to reserve LNG ship construction capacity in China to be used for construction of additional ships for the Gulf nation’s LNG expansion plans.

The agreement was entered into between Qatar Petroleum and Hudong-Zhonghua Shipbuilding Group Co., a wholly owned subsidiary of China State Shipbuilding Corp. (CSSC).

“Pursuant to the agreement, a significant portion of Hudong's LNG ship construction capacity will be reserved for Qatar Petroleum through the year 2027,” said a statement.

The Qataris had been expected to centre most of their carrier building in South Korea but have surprisingly chosen China over the Koreans for the first tranche of berth reservations.

The agreement on. berths was signed by Qatari Minister of State for Energy Affairs, the President and Chief Executive of Qatar Petroleum, Saad Sherida Al-Kaabi, and the Chairman of CSSC Lei Fanpei, in a virtual ceremony.

“The value of this landmark agreement has the potential to be well in excess of 11 billion Qatari riyals ($3.02Bln), depending on our requirements and the extent of China's LNG shipbuilding capacity expansion,” stated Al-Kaabi.

This would suggest an initial booking to build at least 16 or up to 20 ships in China.

Also present at the transmitted event was Qatargas CEO Khalid Bin Khalifa Al Thani and the Chairman of the Hudong shipyard Chen Jianliang, as well as other senior executives.

“We have taken yet another concrete step to reinforce Qatars commitment to its global reputation as a safe and reliable LNG producer at all times and under all circumstances,” said QP CEO Al-Kaabi.

“By entering into this agreement to reserve a major portion of Hudong's LNG ship construction capacity through the year 2027, we are confident that we are on the right track to ensuring that our future LNG fleet requirements will be met in due time to support our increasing LNG production capacity,” he added.

The South Korean shipbuilders Samsung Heavy Industries, Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering, which has merged with Hyundai won all of the last round of Qatari newbuilds.

Between 2004 and 2007, Qatar ordered 45 LNG carriers from the Korean yards when Daewoo built 19 Qatari carriers, Samsung constructed 18 vessels and Hyundai received orders for eight ships.

Now the Qataris have first booked Chinese berths for the start of its shipbuilding programme, which could amount to at least 80 vessels, according to previous statements.

The global LNG fleet consisted of 601 vessels at the start of 2020, including medium-scale vessels of up to 50,000 cubic metres capacity,

A total of 44 newbuild vessels were delivered into the fleet in 2019 while 62 units were ordered versus 77 newbuilds in 2018, mostly from the Korean yards.

Qatar has start developing its drilling campaign for the Persian Gulf feed-gas from the North field that will underpin the feed-gas needs for the LNG expansion at Ras Laffan from 77 million tonnes per annum to 110 MTPA.

A second phase of the North Field LNG expansion, called the North Field South Project (NFS), will further increase Qatar's LNG production capacity from 110 MTPA to 126 MTPA.

The scope of the first phase of the expansion at the Ras Laffan production complex involves an additional four Trains, each with 8.0 MTPA of output.

Qatar is also expected to have partnerships with international energy majors for its expanded North Field-based projects.

Qatar has the southern portion of the North Field in Gulf waters and the other part is under the jurisdiction of neighbouring Iran.

Qatargas, the leading global liquefaction and LNG export company, has achieved a landmark 2,000th cargo delivery to India to help the Asian nation’s transformation to the use of cleaner fuel and to reduce pollution in cities such as Mumbai.

As the Qatari Q-Flex liquefied natural gas carrier “Al Safliyah”, the largest LNG vessel to transit the expanded Panama Canal, is scheduled to arrive at a European port on June 12 with a US cargo in a notable three-continent trading voyage, Qatargas has given details of another shipping first related to Spanish cargo deliveries.