The TotalEnergies Cape Ann LNG terminal anchored in the English Channel off the northern French port city of Le Havre. AFP
The TotalEnergies Cape Ann LNG terminal anchored in the English Channel off the northern French port city of Le Havre. AFP
The TotalEnergies Cape Ann LNG terminal anchored in the English Channel off the northern French port city of Le Havre. AFP
The TotalEnergies Cape Ann LNG terminal anchored in the English Channel off the northern French port city of Le Havre. AFP

Business

Energy

Qatar signs 27-year LNG supply agreement with France

Deliveries are expected to start in 2026

John Benny

October 11, 2023

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Affiliates of QatarEnergy and TotalEnergies have signed two sale and purchase agreements for the supply of up to 3.5 million tonnes of liquefied natural gas a year to France.

The LNG will be shipped to the Fos Cavaou LNG terminal in southern France, with deliveries expected to start in 2026 for a term of 27 years, Qatar's state-owned energy company said on Wednesday.

The volumes will be sourced from the two joint ventures between QatarEnergy and TotalEnergies that hold interests in Qatar’s North Field East (NFE) and North field South (NFS) projects.

The agreements were signed by Saad Al-Kaabi, Qatar's Minister of State for Energy Affairs and Patrick Pouyanne, chairman and chief executive of TotalEnergies, in Doha. Photo: QatarEnergy
The agreements were signed by Saad Al-Kaabi, Qatar's Minister of State for Energy Affairs and Patrick Pouyanne, chairman and chief executive of TotalEnergies, in Doha. Photo: QatarEnergy

“These two new agreements … demonstrate our continued commitment to the European markets in general, and to the French market, thus contributing to France’s energy security,” said Saad Al Kaabi, Qatar’s Minister of State for Energy Affairs.

“Our commitment to ensure continued and reliable supplies of energy to Europe and the rest of the world is underpinned by our substantial and continuing investments across the entire gas value chain,” said Mr Al Kaabi, who is also the chief executive of QatarEnergy.

TotalEnergies’ partnership in the North Field LNG Expansion Projects is made up of a 6.25 per cent share in the NFE project and a 9.375 per cent share in NFS.

Competition for LNG increased after Russia's invasion of Ukraine last year, with Europe importing record volumes of the supercooled fuel to replace Moscow's gas supplies.

Global LNG trade hit a high of $450 billion in 2022 amid a surge in European demand, according to the International Energy Agency.

In June, QatarEnergy and China National Petroleum Corporation entered into a 27-year agreement for the delivery of four million tonnes of LNG per year.

QatarEnergy signed a similar deal with China Petroleum & Chemical Corporation, or Sinopec, in November.

The state-run energy company has also signed sales and purchase agreements with ConocoPhillips to deliver up to two million tonnes per annum of LNG to Germany.

Qatar, one of the world's largest LNG exporters, is looking to raise its production capacity to 126 million tonnes per year by 2027.

Global natural gas demand is set to slow in the coming years amid declining consumption in mature markets due to an “accelerated” roll-out of renewables and improved energy efficiency, the IEA said this week.

Demand is projected to grow by 1.6 per cent a year between 2022 and 2026, down from an average of 2.5 per cent a year between 2017 and 2021, the agency said in its Gas 2023 Medium-Term Market Report.

China, the world’s second-largest economy, is set to account for about half of the total growth in demand until 2026 as it uses the fuel for industrial production and power generating, the report said.

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The worker must also have an attested educational certificate higher than secondary or an equivalent certification, and earn a monthly salary of at least Dh4,000. 

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Updated: October 11, 2023, 12:36 PM
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