ConocoPhillips wins stake in Qatar LNG as Kaabi warns about high prices

ConocoPhillips became the third partner in QatarEnergy's North Field LNG expansion as Qatar's energy minister warned that natural gas and oil prices that are "too high" will destroy demand.

A joint venture between QatarEnergy and ConocoPhillips will own 12.5%, or half a train, in the four-train North Field East expansion project, Qatar's energy minister Saad al-Kaabi said June 20 at a news conference in Doha.

ConocoPhillips, which has worked on Qatar LNG since 2003, joined France's TotalEnergies and Italy's Eni in the project.

Oil and gas prices have surged due to Russia's invasion of Ukraine, which has prompted many European buyers of Russian gas to seek alternatives, including from Qatar. Russia currently supplies 40% of Europe's gas needs, and "it is not logical they can make up that volume in the short term," Kaabi said.

"Prices that are too high are destructive to demand, you do not want a broke customer," he said.

Prices were "causing a lot of economic slowdown around the world" with recession possibly hitting the US next year or in 2024 and some European countries already in slowdown, he said. "This is not something we like to see."

The origins of the high prices started before Ukraine because there had not been enough investment in oil and gas as the world started to move to alternative fuels, Kaabi said.

"There could have been a better approach and a little more balance" to the switch from fossil fuels, he said. The result was that more coal was being used than ever before, and that was "really disturbing", Kaabi said.

Lowest cost

ConocoPhillips has a 70-year history in LNG production, and Qatar's North Field has the world's lowest cost to LNG supply, which can be used as a fuel to help protect against climate change, CEO Ryan Lance said at the conference.

TotalEnergies on June 12 became the first partner in the project, winning a 25% stake in one train. Italy's Eni on June 19 won a 25% stake in half a train. ExxonMobil and Shell were the remaining bidders without an announced deal.

ExxonMobil CEO Darren Woods was set to speak with Kaabi in Doha on June 21 at the Qatar Economic Forum. ExxonMobil's position on the project seemed to be cemented in March last year, when Kaabi said the company would "definitely" be included among the winning partners.

Asian buyers were expected to make up half the market for the project, and buyers in Europe the rest, Kaabi, who is also QatarEnergy's CEO, has said.

The North Field Expansion includes six LNG trains that will ramp up Qatar's liquefaction capacity from 77 million mt/year to 126 million mt/year in two phases by 2027, with production starting in 2026, Kaabi said.

When complete it will make Qatar the leading exporter of LNG. The four-train part of the expansion will not only boost LNG production capacity by 32.6 million mt/year, but it will also mean 1.4 million boe/d of increased production capacity of ethane, LPG, condensates and helium, Kaabi said June 20.

The winning companies will collectively share a 30% stake of the project, Qatar has said previously.

The first phase of the expansion will cost $28.75 billion, making it one of the largest energy projects anywhere. The field, which Qatar shares with Iran, is the world's largest offshore gas field.