French energy giant TotalEnergies on Saturday signed a $1.5 billion agreement with its Qatari counterpart to help shore up medium-term gas supplies to Europe.

Europe is racing to find new energy sources to wean itself off Russian gas in the wake of the Ukraine war. 

German Chancellor Ola Scholz is on a visit to the Gulf this weekend, including Qatar, with energy security high on the agenda.

What do we know about the deal?

The head of QatarEnergy, Saad Sherida al-Kaabi, said TotalEnergies would take a 9.375% stake in the North Field South project — part of the world's largest gas field. The Gulf state has said foreign firms can own up to a 25% stake in the project.

Al-Kaabi said the French giant would also help to finance the extraction of gas from North Field South, and would take on an "enhanced strategic" role in Qatar's gas expansion.

Liquified natural gas (LNG) from the field is expected to start coming online in 2026.

TotalEnergies Chief Executive Patrick Pouyanne, who traveled to Doha for the signing, said the deal came at a "perfect time" to help resolve Europe's energy crisis.

Russia has cut gas supplies to Europe in retaliation for sanctions over the Ukraine war, sparking fears the continent could see electricity and heating shortages this winter.

What is North Field?

North Field is Qatar's part of by far the world's largest gas field, the South Pars-North Field, under the Persian Gulf, which was discovered in 1971.

The South Pars section is in Iranian territorial waters, while the North Field is in Qatari waters.

The North Field covers an area of more than 6,000 square kilometers, equivalent to about half the land area of Qatar.​​

QatarEnergy estimates that North Field holds about 10% of the world's known natural gas reserves, which could last up to 600 years.

The field has allowed Qatar to become one of the world's top LNG producers, alongside the United States and Australia

North Field South is the second phase of the expansion of the gas field, which was first announced in 2019, alongside North Field East.

Total has already signed a $2 billion deal to take part in North Field East, which will help the Gulf state boost its LNG output by more than 60%.

Other international partners are Britain's Shell, Exxon Mobil, ConocoPhillips from the United States and Italy's ENI.

Qatar's gas is among the cheapest to produce and has fueled an economic boom in the tiny state, which has become one of the world's wealthiest countries.

South Korea, Japan and China are the main markets for Qatar's LNG.

But the Gulf state signed an LNG cooperation deal with Germany this summer and has helped Britain with extra supplies.

mm/msh (AFP, Reuters)