Energy & Mining

Leader in LNG

North Gas Field

The world's largest natural gas field is set to undergo expansion at an opportune time in the global LNG market.

Located in the Arabian Gulf and shared by Iran and Qatar, the world’s largest non-associated gas reservoir is set to undergo an expansion project to increase Qatar’s LNG production capacity from 77 to 100 million tons per annum by 2023.

According to the International Energy Agency, the offshore North Gas Field, also named as South Pars by Iran, holds an estimated 50.97 trillion cbm of gas and over 50 billion barrels of condensates. The areas under Qatar’s authority surpass the size of Iran’s domain. It supplies virtually all of Qatari gas production and accounts for over 60% of the country’s revenues for exports, making Qatar the largest LNG exporter, with 30% of global market share and 77 MT exported.

North Field’s potential production had been kept on hold after a moratorium imposed by Qatar’s state-owned company Qatar Petroleum in 2005 caused by concerns that the quick development of the field might damage its long-term output capacity. However, 2017 marked the end of the moratorium, and with it a new plan for expansion was put in place.

The new expansion plans will be implemented by Qatargas, the single Qatari LNG producer after the merger with RasGas. Its main shareholder is Qatar Petroleum, but Qatargas also counts on a wide range of international shareholders such as ExxonMobil, Total, Mitsui, and Shell. With two major contracts awarded by Qatargas in 2018, American firm McDermott will lead the offshore expansion while Japanese firm Chiyoda will take over the onshore development.

McDermott has been awarded with the contract to design offshore jackets in the North Field. Qatar Petroleum recognized the importance of this project as a step forward for the launch of the drilling campaign in 2019.
The offshore facilities will be integrated with three onshore LNG production mega trains. TBY talked to Chiyoda, the company in charge of the front-end engineering and design (FEED) of the trains. Junji Nagasaka, Managing Director of subsidiary Chiyoda Almana stated: “The most important factor behind our bid’s success was our extensive experience in designing and executing complex projects. We know how to organize and manage projects of this size and scale, and that positioned us perfectly in terms of winning the bid.” For Qatargas, Chiyoda’s past experience and success in extensive engineering activities was a safe bet.

Referencing the progress on the mega trains and its impact on the expansion project, majority stakeholder Qatar Petroleum’s CEO Saad Sherida Al-Kaabi said, “This is yet another milestone on the road to implementing one of the most ambitious gas projects in the southern sector of the North Field and starting the first LNG production from the new LNG mega train by the end of 2023.”

This move by Qatar comes as a strategic step to secure the country’s leading position in the international LNG market. Although competition will increase, especially taking into account investments in facilities from other suppliers such as Australia, Qatari gas will still remain competitive given the experience of the country in producing and exporting, and its considerable market share. Also, given the fact that Qatar is able to increase gas output at a lower cost than competitors, the country is likely to remain the market leader for the next decade.

Even though the gas market is well supplied at the moment and prices are low, there will be new increased demand by the time Qatar starts commercializing its new output. “By the time new capacity is commissioned in 5-7 years’ time, new pre-FID LNG supply is likely to be required in the global market”, said Giles Farrer, research director of global gas and LNG supply at Wood Mackenzie.

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