Qatar possesses a competitive edge over other producers to cater to the liquefied natural gas (LNG) market in view of its having the “first mover advantage” and being “the most cost effective supplier”, said HE the Minister of Energy and Industry, Dr Mohamed bin Saleh al-Sada.
With a forecast growth of 4-5% in LNG demand in the foreseeable future and with abundant proven gas reserves, it was but natural for Qatar to further monetise its huge gas resources and contribute towards global energy security, al-Sada told S&P Global Platts.
He said: “Qatar's excellent track record of being the world's leading LNG supplier over the past more than two decades is well established. It has substantially invested across the entire LNG value chain and has established a name for being a reliable LNG supplier to all corners of the globe, served by its own world's largest LNG fleet comprising 65 LNG Tankers.”
Qatar, he said, currently supplies about a quarter of the world's total LNG. It intends to remain the global leader in LNG supplies in the future as well by increasing its LNG production by 30% from the current 77mn tonnes per year (tpy) to 100mn tpy; to be fully operational by 2024.
As regards business models, they are governed by the market fundamentals and the need of the consumers and suppliers, keeping mutual interest in perspective.
Al-Sada said: “The wise decision of His Highness the Amir to lift the moratorium on the development of Qatar’s North Field reservoir and the expansion of its gas production capacity is timely.
“It reflects a strategic approach to meet the LNG market demand, which is expected to tighten beyond 2024,” al-Sada said.
Asked whether Qatar has spare LNG capacity to supply UK to ease energy security fears, al-Sada said: “"Every country tries to have a broad base of supply sources for strategic commodities, based on its supply and demand requirements. UK and Qatar have strategic co-operation in many areas and energy supply is one of them. About 13% of UK's gas supplies come into the country in the form of LNG.
“Over the years, the UK has been relying on Qatari LNG imports to meet its demand. Qatar's South Hook Terminal near Milford Haven has one of the largest LNG capacities in Europe. It can deliver 15.6mn tonnes of LNG per annum to the UK market."
On the LNG market, the minister said: “There is no LNG supply glut. There may be a surplus of only 10mn tonnes per year (tpy) of LNG in the early 2020s. In a 350mn tpy LNG market, this means that the market is practically in balance. And the global LNG market is expected to tighten up beyond 2024.
With regard to meeting the European demand, he said it will depend on how the region balances its piped gas imports and LNG. The latter requires investments in regasification terminals.
“As regards Qatar, we consider Europe as a strategic market and currently supply LNG to eight different destination in Europe. Our exports to this region in 2017 constituted about 35% of our global supply. With planned expansion of our LNG capacity by 2024, we look forward to further consolidation of our LNG presence in the global market,” al-Sada said.
With regard to market fundamentals, the challenge for the LNG industry today is to find a balance between buyers' pursuit of competitiveness and flexibility and producers' need to maintain a healthy cash flow out of the exploitation of their natural resources.
“The resource holders and investors need to be comfortable with the level and sustainability of future prices to determine the viability of their projects. This will not only soften the boom and bust cycles, but would also prevent supply shortages and price shocks,” al-Sada noted.