Qatar will maintain its dominance of the global LNG market

16th July 2017, Bachir El Nakib (CAMS), Senior Consultant, Compliance Alert (LLC)

File picture of an LNG Plant in Qatar used for representation.

Qatar said Tuesday it plans to increase natural gas production by 30 percent over the next several years.

Saad Sherida Al-Kaabi, the head of Qatar Petroleum, told a press conference that the country intends to raise production to 100 million tonnes of natural gas a year by 2024.

"Last April, we announced our intention to develop a new gas project in the southern sector of the North Field that can be targeted for export," Kaabi said.

"Once completed within 5-7 years from now, this project will raise the production of Qatar to about 6 million barrels of oil equivalent per day."

"This new project will strengthen Qatar's leading position," Kaabi told reporters.

"We will remain the leader of LNG for a very long time."

The announcement comes a day after France's Total signed an agreement with Iran to develop its part of the shared off-shore gas field that Tehran calls South Pars.

Kaabi said there is no cooperation with Iran on any project in the North Field, but the countries have a joint committee that meets every year to discuss development of the field.

"We know what they [the Iranians] are doing and they know what we are doing," he said.

Qatar is the world's biggest producer of Liquefied Natural Gas (LNG).

Qatar's current production is up to 77 million tonnes per year. The expansion will increase output levels up to the equivalent of six million barrels of oil per day, Kaabi said.

The announcement comes as the Gulf faces its worst diplomatic crisis in years after Saudi Arabia and its allies imposed a sweeping embargo on Qatar last month.

Kaabi said Qatar wanted the production increase to be carried out through a joint venture with international companies.

But he added that the emirate would still go ahead with it even if Saudi Arabia and its allies made good on their threat to sanction any international firm working with Qatar if it failed to meet their demands.

"We have absolutely no fear of having the embargo in place," he said.

"Regarding the... possibility of embargo countries asking some of the international companies or contractors not to work with us, we absolutely do not have any issue with that.

"The companies that choose not to work with us -- that's fine, that's their choice.

"If we run out of companies that will join us... if there are no companies willing to work with us, we will go to 100 million, 100 percent."


Doha: The weekly note by QNB said that Qatar will maintain its dominance over the global liquefied natural gas market despite increased supply from Australia and the United States.

The report noted that Qatar currently accounts for 30.1 percent of the global market. The country captured nearly 70 percent of the new African demand, more than compensating for the lower cargoes to Japan.

Qatar’s position is likely to be cemented by its recent decision to boost production by 30 percent over the next five to seven years.

New data from BP have provided a summary of the state of the global liquefied natural gas (LNG) market in 2016. The market remained oversupplied, but the extent of oversupply increased.

Global LNG supply rose by 6.5 percent compared to virtually zero growth over 2011-2015. Demand growth increased by 4.2 percent, its fastest rate in the past five years.

The report noted four major market developments in 2016. The first was that supply growth was led by a surge in Australian exports. Exports from Australia increased by 49 percent and represented nearly 90 percent of the increase in global supply. This reflects over $200 billion in past investments and the completion of the first phases of mega projects, launched several years ago when prices were higher.

Australia is now the worlds second largest LNG producer and accounted for 16.4 percent of supply in 2016.

The second development was that the US began its first major international LNG shipments in 2016. The majority of its exports went to Latin American countries, particularly Chile and Mexico. Although it remains a small share of global supply, the US entry into the LNG export market represents a major shift.

The third was that demand was propelled by China and Africa, more than offsetting weaker demand from Japan and South Korea. Chinese LNG imports rose by a massive 33 percent. The rapid increase reflected the Chinese authorities goals to decrease reliance on coal and increase consumption of gas, one of the cleanest fossil fuels. African imports of LNG nearly tripled in 2016, drawn by lower prices, weak inter-regional pipeline infrastructure and rapid population growth.

These increases more than compensated for a 2 percent decline in imports from Japan and flat import growth from South Korea, the worlds largest LNG importers. A desire to reduce reliance on LNG, cheaper prices of alternative energy sources and weaker power demand contributed to slower demand growth from the two countries.

The fourth market development was Qatar remaining the biggest LNG supplier despite increased output from Australia and the US. The proposed 30 percent increase in LNG production looks to add to that leadership.

The four developments have important implications going forward. Production from the US and Australia is expected to increase substantially, maintaining the state of excess supply in the market. But subsequently, rising demand from Asia, a concerted global effort to adopt cleaner sources of energy and deferred investments are widely expected to push the market back into balance, potentially even into undersupply, around 2020. Qatar, being one of the most nimble and cost-efficient producers, is well positioned to take advantage by boosting its production as the market rebalances.

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