Qatar LNG development will have capacity of 2 billion cubic feet per day
Qatar is lifting a 12-year long self-imposed moratorium on development of its North Field, the worlds biggest natural gas field in an effort to maintain its hold on the LNG market.
The moratorium on the Qatar LNG field in 2005 was instituted to give Doha time to study the impact of a rapid rise in output on the offshore reservoir. Qatar shares the field with Iran.
Currently, the vast offshore gas field accounts for nearly all of the Middle Eastern country’s gas production and about 60 per cent of its export revenue.
On Monday, Qatar Petroleum President and CEO Saad al-Kaabi told reporters “We have completed most of our projects and now is a good time to lift the moratorium.” He added “For oil there are people who see peak demand in 2030, others in 2042, but for gas demand is always growing.”
Upon completion of development of the southern section of the North Field in five-to-seven years, capacity will be boosted by about 10 per cent to about 1 billion cubic feet per day, or 400,000 barrels of oil equivalent.
The expansion of the Qatar LNG industry comes at a time when new Australian production coming online is expected to make the country the world’s largest exporter of LNG this year. As well, Russia and the United States are adding supplies to an already flooded market.
Thomson Reuters data shows current global installed LNG capacity is over 300 million tonnes per year, but only 268 million tonnes of LNG were traded in 2016.
That discrepancy has dragged down Asian spot LNG prices by over 70 per cent from 2014 peaks to $5.65 per mmBtu.
Kaabi said low LNG prices would not pressure the tiny Gulf monarchy, adding “By the time this project comes online in five years or so it should be a good market for gas.” He believes developing the North Field will help his country maintain its competitive edge after 2020 when analysts expect the global LNG market to tighten.
Giles Farrer, research director, global LNG at Wood Mackenzie echoed Kaabi’s position in an email to Reuters “With global activity levels and costs low, now is a good time to add new capacity, even if the LNG market does presently look over supplied.”
Farrer added “It’s a signal that Qatar intends to increase its market share, which has been falling as other regions have built new capacity.”
An energy advisor to the Qatar government, not authorized to speak publicly, said the move to bump up production is a warning to competitors considering LNG investments that Qatar remains aggressive.
“It will certainly give rivals something to chew on,” he said.
Last November Iran along with France’s Total pledged to develop the South Pars II gas field in the Persian Gulf. Last week Iran’s oil minister vowed to increase production of its part of the North Field.
“Iran’s gas production in South Pars can exceed Qatar’s before the end of new Iranian year (ending March 20, 2018),”Bijan Namdar Zangeneh was quoted by Tasnim news agency on Thursday.
In response to the the minister’s comments, Kaabi said Qatar’s decision to lift the moratorium was not prompted by Iran’s pledge.
“What we are doing today is something completely new and we will in future of course … share information on this with them (Iran).”
Along with increases in production, Qatar Petroleum is looking to save hundreds of millions of dollars by merging its two LNG divisions, Qatargas and RasGas.
