Qatar is expected to maintain its title as the world’s top LNG (liquefied natural gas) exporter well into the next decade, according to Arab Petroleum Investments Corporation (Apicorp).
It is also expected that the FID (final investment decision) for the North Field Expansion (NFE) megaproject (estimated value at $50bn) would be pushed well into 2021, Apicorp said in its latest report "MENA-Gas-Petrochemical-Investment-Outlook-2020-24".
Currently, Qatar Petroleum (QP) is the largest equity LNG holder in the world with ownership of stakes ranging from 63% and 70% in Qatargas combined projects (52.5mn tonnes per annum equity nameplate capacity).
Over the last decade (2009-19) the Australian wave of new additions totalling about 88mtpa was followed by the 2015-19 US wave of new LNG trains spurred by the surge of associated gas from shale oil bonanza that added more than 45mtpa of export capacity by end of 2019.
“Qatar has been increasingly facing stiff competition in the global LNG markets that it undisputedly dominated,” it said.
In April 2020, QP announced that it signed an agreement with China’s Hudong-Zhonghua Shipbuilding Group (Hudong) to “reserve a significant portion of Hudong’s LNG ship construction capacity through 2027.
In June 2020, QP also signed heads of agreements worth $19.2bn with the Korean trio: Daewoo Shipbuilding and Marine Engineering, Hyundai Heavy Industries and Samsung Heavy Industries to reserve construction capacity for up to 100 new LNG carriers through 2027.
Qatar’s shipbuilding ambition is aimed at facilitating the LNG export quest providing shipping for QP and also ExxonMobil’s Golden Pass LNG.
"While this can be considered the biggest LNG vessel order in history, commitments still need to be firmed up," it said, adding the ships are expected to be completed between 2023 and 2027, with the first delivery in the first quarter of 2024.
As a national oil company, QP has stated a desire to retain a minimum of 70% equity holding in its new trains. Qatar’s LNG business is highly attractive for potential investors due to factors as its low-cost resources, high-value associated liquids and brownfield economics.
QP anticipates making a decision on partners by the fourth quarter of 2020, though delays in the EPC tender process and depressed gas prices are expected to push the decision further into 2021.
Stressing that such a circumstance would make the possibility of solely funding the full project more likely if needed; Apicorp said, "Self-financing the NFE would be a historic precedent as compared to QP financing legacy LNG mega trains."
The report said in 2005, Qatargas II was financed for $9.68bn in one debt tranche, with project financing including the commercial banks, Islamic banks, and export credit agencies.
In 2006-07, Qatargas III was financed for $5.77bn through lenders from a similar mix of sources, with 16 years maturity. Qatargas IV was also financed through similar financing structures as Qatargas II and III.
In 2008, RasGas III was financed for $10.6bn, with bonds included alongside syndicated loans and equity investments.
The previous Qatargas/RasGas projects were able to secure financing only after securing offtake guarantees, including the long-term contracts that underpinned FID on the mega trains.
"Therefore, the plan to self-finance the expansion trains could remove the need to finalise marketing arrangements before reaching FID, although this would require QP and its potential partners to be willing to take on the marketing risk," Apicorp said.