Qatar Petroleum delays start-up of North Field LNG expansion due to COVID-19

Dubai — Qatar is pushing back the start-up of the first phase of its North Field LNG Expansion Project by up to six months so that it will now enter production in 2025, according to the emirate's sovereign bond prospectus, seen by S&P Global Platts.

The North Field project, first announced in September 2018, will see state-owned Qatar Petroleum's LNG production increase to 110 mt/year from 77.5 mt/yr via the construction of four new trains, which will be brought online in six-month intervals.

A second phase of the project, announced in November, plans to boost QP's LNG production capacity by an additional 16 mt/yr to 126 mt/yr by the end of 2027, representing an overall increase of 64%. The second phase of the project is understood to still be on track.

Should it all go ahead, Qatar will reclaim its mantle as the world's top LNG exporter from Australia, which overtook the Persian Gulf state at the end of last year.

Phase 1 has been delayed by the coronavirus pandemic hindering the bidding process for potential partners, according to the state-run Qatar News Agency.

Qatar has short-listed several international oil majors to be awarded a collective 30% share of the first phase, including Chevron, Eni, Shell and Total.

Preparation work is under way. In March 2018, QP selected Chiyoda Corporation of Japan to execute the front-end engineering and design the onshore facilities of the North Field expansion.

The onshore facilities will receive approximately 6.4 Bcf/d of gas from the southern sector of the North Field and will produce approximately 32 mt/yr of LNG, 4,000 mt/d of ethane as feedstock to a petrochemical development in Qatar, 260,000 b/d of condensate, 11,000 mt/d of LPG and 20 mt/d of helium.

As of September 30, 2019, Qatar's proven reserves of crude oil and natural gas including condensate amounted to approximately 171 billion barrels of oil equivalent, according to the bond prospectus.

That comprises proven reserves of about 837.2 Tcf of natural gas including condensate and 2.37 billion barrels of crude oil.

Virtually all of Qatar's proven reserves are located in the North Field.

Revenues from oil and gas were QR129.3 billion ($35.5 billion) for the nine months ended September 30, 2019, accounting for 34% of the country's nominal GDP, according to the prospectus.

Qatar is thought to be looking to sell a bond of about $5 billion, about half the size of its issuances in recent years. The proceeds will be used for budgetary and general funding purposes, the prospectus says.