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Qatar’s commitment to boost long-term production will solidify its position as the global leader in liquefied natural gas (LNG) amid supply growth in various markets. Qatar’s share of global LNG supply stood at 30.1% last year as it captured nearly 70% of the new African demand. more than compensating for the lower cargoes to Japan. Qatar remains the number one LNG player in the world despite higher supply from Australia and the US. according to researchers at QNB. As of 2016. Australia is the world’s second largest LNG producer and accounted for 16.4% of supply last year.
Qatar’s position is likely to be cemented by its July decision to boost production by 30% to 100mn tonnes per year (tpy) over the next five to seven years. The production boost will come through doubling of LNG output from the new export-oriented gas project in the North Field. which is expected to be completed within the next seven years. according to Qatar Petroleum.
Effectively. the new project would increase the North Field’s production of natural gas. condensate and other associated products by 1mn barrels of oil equivalent per day to cumulative 6mn barrels of oil equivalent per day. This new project would further enhance Qatar’s leading position in the global gas industry. while at the same time meeting its worldwide customers’ growing needs for the reliable and environmentally friendly fuel.
Qatar’s renewed gas development at North Field would certainly give it a competitive edge after 2020. when the global LNG market is expected to tighten. The global market still remains oversupplied. data show. Last year. the extent of oversupply had increased. Global LNG supply rose by 6.5% compared to virtually zero growth over 2011-2015. However. there was a growth in demand too (by 4.2%). its fastest rate in the past five years. There were four major market developments in 2016. QNB points out.
First. supply growth was led by a surge in Australian exports.
Second. the US began its first major international LNG shipments in 2016.
Third. demand was propelled by China and Africa. more than offsetting weaker demand from Japan and South Korea. Fourth. Qatar remains the number one LNG player in the world. Even as Qatar increases production. and attains 100mn tpy over the next seven years. it is likely that the output from Australia and the US would also flood the market by then.
But Qatar has a distinctive advantage over its competitors – Ras Laffan. which is home to Qatar’s world-scale LNG production facilities. has one of the lowest costs of natural gas production. Obviously. Qatar’s low-cost base gives it a competitive advantage over other established LNG suppliers and could benefit the country in maintaining a competitive edge after 2020. Over the next decade. analysts expect the global LNG market to tighten as current low LNG prices are anticipated to deter investment in high cost competing projects. leading to tighter supply and better prices.
