Market analysts predict that by 2030, Qatar’s anticipated increase in its production of liquefied natural gas (LNG) may give them about a quarter of the world market, driving out competing projects, even in the US, where President Biden has halted new export approvals.

One of the top exporters of LNG worldwide, Qatar intends to increase its output of the gas by 85% from the current 77 million metric tonnes per year (mtpa) from its North Field to 142 mtpa by 2030, up from the previously projected 126 mtpa.

Given Qatar’s advantage as the world’s lowest cost supplier, some market experts suggested that the move will have an influence on international projects in the US, East Africa, and other regions that require funding and long-term customer commitment to reach final investment decision (FID).

“The Qataris realised that they should be able to offer pretty much the most competitive prices. They have the reserves, lower costs for building incremental capacity, the relationship with engineering firms and existing clients, so why stop here?,” said Ira Joseph, Senior Research Associate at Columbia University’s Center on Global Energy Policy.

“This suggests that they are hurtling into use it or lose it mode. If you’re the world’s low cost producer, why not throw down the hammer & scare away any competition that’s requiring long-term customers & financing,” he added.

The timing of Qatar’s announcement is “fortuitous,” according to Fraser Carson, Senior Research Analyst of Global LNG at Wood Mackenzie. This is because other major LNG competitors are stalling, the Biden administration has paused U.S. LNG export approvals, Russian LNG is sanctioned, and Mozambique’s civil unrest is still ongoing.

After Europe decided to wean itself off of Russia’s pipeline gas after its invasion of Ukraine, competition between the US and Qatar grew. US gas suppliers filled the supply gap and surpassed Qatar to become the world’s largest LNG exporter in 2023, though Qatari supplies also helped to replace the volumes.

Over the next four years, the capacity of LNG exporting from the United States would nearly treble. However, gas importers have warned that this decision to halt environmental reviews of applications for new LNG export terminals will jeopardise global energy security in the future.

“The signal the U.S. projects need to take from this: if they don’t go ahead, someone will,” said Kaushal Ramesh, Rystad Energy’s vice president for LNG research.

According to Alex Froley, senior LNG analyst at data intelligence company ICIS, the additional expansion is anticipated to bring about a period of more steady, lower prices for the remainder of the decade and would stimulate increased take-up of LNG from Asian purchasers.

“Bringing online 16 mtpa of low cost volumes is positive for Asia and is exactly what the LNG market needs to guarantee a long-term future in emerging Asia”, Rystad’s Ramesh added.
The demand for petrol in Asia is expected to propel the global market’s growth from its current 400 mtpa to 580-600 mtpa by 2030. By then, Qatar is anticipated to hold 24–25% of that market.

“Qatar is geographically well placed to meet current high demand in Northeast Asia in China, Japan and Korea and future demand in the only real growth region of South Asia, especially in India,” said Henning Gloystein, Practice Head, at Energy and Resources at Eurasia Group.

Gas has a lot of potential to be a part of the energy mix in the future, according to QatarEnergy chairman Saad al-Kaabi, who stated on Sunday, “We think there will be a shortage of gas, even with our project.”

Others contend that there is still a great deal of room for gas to reduce emissions by replacing coal and oil, even though there are worries about the additional carbon emissions impact from increased global LNG production, according to ICIS’s Froley.

“Despite being the world’s largest LNG importer last year, China’s overall energy mix is only around 8% gas against 61% for coal and 18% for oil, for example,” he added, citing IEA figures.

For many years, the leading energy corporations in the world, such as ConocoPhillips, Shell, TotalEnergies, and Exxon Mobil, have been essential to Qatar’s LNG sector. They all own shares in the current production facilities and, in more recent times, have purchased shares in the upcoming phases of expansion, providing cash in return for LNG volumes.

Industry sources claim that although the new contracts are not as profitable as previous ones, they nevertheless give the corporations a significant presence in the LNG market, which they anticipate will increase over the next several decades as economies switch from coal to natural gas, which emits fewer emissions.

Industry sources anticipate that since Qatar has a large amount of LNG to sell, it will continue to look for partnerships with international companies. One source speculates that Woodside, an Australian company, which has recently shelved plans for a $52 billion tie-up with smaller rival Santos and whose U.S. Lake Charles project is in jeopardy due to Biden’s pause, may look to become a partner with Qatar.

(Adapted from EnergyNow.ca)

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