Europe faces “industrial” and “political” risks due to the energy crisis, the head of British energy giant Shell warned Sunday as he signed a new natural gas project in Qatar.
Shell has taken a 9.375% stake in the North Field South project, which is expected to help boost the Gulf country’s liquefied natural gas (LNG) production in the coming years.
At the signing ceremony in Doha, its CEO, Ben van Beurden, warned of the impact of the energy crisis, fueled by the war in Ukraine, on the European industrial sector.
The old continent has reduced its consumption “quite effectively, quite significantly” to cope with the loss of 120 million tons of Russian gas per year, he said.
Europe is looking for short-term alternatives, but the solution is not just to find new supplies, said Ben van Beurden, who will leave his post at the end of the year.
“A lot of people talk about turning down the thermostat or not turning on the air conditioning, but there’s also the question of why not cut back on fertilizer or certain petrochemicals. And this rationalization, if it goes on for a long time, becomes permanent.”
“You can say it’s inevitable and in some ways it leads to renewal,” Van Beurden continued. “But to do this on this scale, so abruptly in a time of economic challenges, will put quite a bit of pressure on European economies and perhaps also on the political system in Europe,” he warned.
Shell became on Sunday the second foreign partner of Qatar Energy, alongside the French TotalEnergies, chosen to develop the North Field South, a project to extend the North Field, which represents about 10% of the known natural gas reserves in the world.
It has taken a 9.375% stake, identical to that of the French group, the total share of foreign companies in the project having been set at 25%.
In July, Shell was chosen as the fifth and final partner (along with TotalEnergies, ExxonMobil, ConocoPhillips and Eni) for the North Field East, an initial development project for the gas field that extends under the sea into Iranian territory, where the Islamic Republic’s efforts to exploit it are hampered by international sanctions.
Qatar is already one of the world’s leading producers of liquefied natural gas (LNG), along with the United States and Australia, and wants to increase its production by more than 60% by 2027, when the North Field South project is due to come on stream.
