Qatar, which accounts for one-third of the global liquefied natural gas (LNG) market, is enhancing its LNG production by 30% to 100mn tonnes per annum (Mta), a move that could substantially boost the fastest growing economy and support the exchequer.
The production boost comes through doubling of LNG output from the new export-oriented gas project in the North Field, which is expected to be completed in 5-7 years, Qatar Petroleum president and chief executive Saad Sherida al-Kaabi told reporters.
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.
In April this year, al-Kaabi had announced the lifting of moratorium on North Field, which is the world's largest non-associated natural gas field, and disclosed the proposed gas project in the southern sector of the North Field but had not decided if exports will be in the form of LNG, GTL (gas-to-liquids) or pipeline gas.
“After further assessment, we have decided that the best way to develop this huge project is by dedicating it to the production and export of LNG, thereby increasing the production capacity of Qatar from 77Mta to 100Mta, which means a 30% production increase," he said.
With the conclusion of further technical studies, it has been decided that the best option would be to double the size of the project to 4bn cu ft of gas per day, which constitutes a 20% increase from the current North Field production rate, or about 1mn barrels of oil equivalent per day,” al-Kaabi said.
Although QP is inviting international players to be joint ventures, if it does not materialise (due to the current economic blockade), then it would go solo, he said in response to a query whether the "further sanctions" (as aired by one of the siege countries if Doha did not meet their 13-point demand) could dampen the project.
London Stock Exchange-listed Qatar Investment Fund (QIF) had viewed that Qatar's renewed gas development at North Field could give it a competitive edge after 2020, when the global LNG market is expected to tighten.
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, according to al-Kaabi.
"The planned production increase will also contribute to monetising Qatar’s resources and to stimulating the domestic economy as well as the country's overall development in line with the Qatar National Vision 2030," he said.
Asked what would be Qatar's share in the world LNG market once Doha achieves 100Mta target, al-Kaabi said it would be difficult to predict at present since it would depend on various factors such as production from elsewhere. “We will still be market leader,” he added.
Analysts have said by the time Qatar attains it, the output from the Australia and the US would also flood the market.
Global credit rating agency Standard and Poor's had said Qatar has one of the lowest costs of natural gas production at $1.6 to $2 per million British Thermal Units, and hence state-owned QP -- responsible for all phases of the oil and gas industry in Qatar – is expected to remain "profitable".
Highlighting that Qatar’s low-cost base gives it a competitive advantage over other established LNG suppliers, QIF said this development could benefit Qatar in maintaining a competitive edge after 2020, when the global LNG market is expected to tighten as current low LNG prices are anticipated to deter investment in high cost competing projects, leading to tighter supply and better prices.
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