Riding the gas wave
Qatar continues to thrive as the world turns towards LNG
Qatar continues to thrive as the world turns towards LNG as a cleaner feedstock option
Driven by large-scale public infrastructure spending, Qatar’s GDP is expected to grow 6.5 per cent this year, and at an even higher 6.8 per cent in 2014. According to the ‘Qatar Economic Insight’ report, published by QNB, the country’s current account surplus rose by 32% of GDP spurred by record-high gas and non-oil exports this year.
The same report forecasts that the surplus is expected to remain high as a result of rising manufactured exports, primarily from the country’s downstream sector, such as Gas-to-Liquids, petrochemicals and fertilizers, not to mention that Brent crude oil prices are expected to average $105-a-barrel.
Last year, Qatar allocated around 66.4 per cent of natural gas production to LNG for export. The report suggests that this proportion will fall slightly going forward, as Qatar increases production to feed new GTL facilities and to meet domestic industrial and power demand, but even this is good news as GTL products prove to be more valuable on international markets.
Even with this in mind, Qatar’s LNG export revenues are unlikely to fall by much, especially considering the number of new markets that it has created over the past five years.
In 2010, Qatargas delivered LNG to only seven countries, but in three years, the company has tripled this number to 21, according to an interview with HE Dr. Mohammed bin Saleh Al Sada, Minister of Energy and Industry for Qatar, published in The Oil & Gas Year Qatar 2013.
Considering that global re-gasification facilities for receiving LNG imports had reached a capacity of 668m tonnes by the end of 2012, compared with global LNG production of 282m tonnes, it is no surprise that Qatar has managed to find its markets so quickly. After all, Qatar alone produces approximately 77.2m tonnes of LNG, roughly 27 per cent of the world’s total.
“Being the world’s largest LNG producer, we are demonstrating one of our fundamental marketing principles that Qatargas sells LNG to where it is needed the most,” said Khalid Bin Khalifa Al-Thani, CEO of Qatargas, last year after the company announced that it would supply over 20 million tonnes of LNG to Japan following the Fukushima nuclear disaster in 2011.
According to a keynote speech which the Minister recently delivered at the opening of the LNG Producer-Consumer conference in Tokyo, the growth in international demand for natural gas as an energy source has been driven primarily by economic development in Asia coupled with efforts to mitigate climate change and decrease CO2 emissions.
“Thanks to a robust economic growth and increasing populations, Asian economies are not just demanding more energy, but also cleaner and more flexible energy,” he said.
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“In 2012, Asia imported an additional 15.6 million tonnes of LNG, representing a 10 per cent increase over 2011.” Asian countries accounted for approximately 48 per cent of LNG exports in 2011, but by 2012 the Asia Pacific region represented 63 per cent of LNG exports.
But as the Minister pointed out, this sharp increase was due primarily to the shutdown of nuclear power plants in Japan following the Fukushima nuclear disaster.
Now that Japan has shut down the last of its nuclear reactors, (nuclear energy provided approximately a third of its energy supply) the country will be looking to boost LNG imports to meet the electricity shortfall.
“Japan alone was responsible for over 50 per cent of Asian LNG consumption growth, [in 2012] but that is mostly due to the shutdown of its nuclear reactors,” the minister commented. This has quickly accelerated Japan to becoming Qatar’s largest trading partner, with a total trade volume exceeding $37 billion in 2012, he added.
But Qatar’s LNG tankers are sailing beyond Japan to countries like Indonesia and Malaysia. Attracted to stronger prices than those offered in Europe as faster economic growth continues to drive demand for energy. The QNB report also highlights the infrastructure challenges that markets like South Korea has, where the lack of local gas or pipeline imports has forced the country to look towards LNG.
While speaking in Japan, the Minister also expressed the view that the next five years will see some growth in the global LNG supply, thanks to developments in North America and Australia.
But, “such additions may not be enough to meet the increasing apetite of new emerging markets including the Middle East and South America, along with the expected growth in global consumption by recovering traditional economies,” he added.
Qatar has apparently also done well to maintain European markets as destinations for its LNG. Qatargas recently signed a five-year deal to supply 1.14m tonnes of LNG to Petronas in Britain.
Britain’s falling gas production has begun to take its toll as rising competition for gas supplies begins to reflect in prices ahead of the winter. Qatargas is set to deliver fuel to the Dragon LNG terminal by January when gas demand often peaks in the UK.
So despite what sceptics have been saying about shale gas in North America bringing Qatar’s glory days to an end, the rest of the world seems ready and willing to continue taking more LNG exports from the Arabian state.
- 66.4% Qatar allocated this much of gas production to LNG