Qatar Vows to Regain LNG Export Crown

Global LNG giant Qatar has ­announced surprise plans to boost LNG exports to more than 100 million tonnes a year, in a move that would see it regain the mantle of world’s biggest LNG exporter from Australia and put pressure on future LNG exports and projects like Woodside’s ­proposed $US25 billion ($33bn) Browse development.

Last night (Australian time), the head of Qatar Petroleum told international wire services the emirate planned to raise production from current levels of about 77 million tonnes of LNG a year to 100 million tonnes by 2024.

Analysts had previously expected Qatar to hold exports fairly steady, although earlier this year it removed a self-imposed ban on expanding its giant North Field. “This new project will strengthen Qatar’s leading ­position,” Qatar Petroleum chief Saad Sherida Al-Kaabi said, ­according to an AFP report. “We will remain the leader of LNG for a very long time.”

Australia’s LNG production is expected to plateau at about 80 million tonnes of LNG in the next year or so to become the world’s leading exporter.

But the proposed Qatar ramp-up would easily regain the Persian Gulf sheikdom’s position as the world’s biggest LNG exporter.

The announcement comes with spot LNG prices in the doldrums and the US under Donald Trump threatening to ramp up its own LNG production more than expected, threatening Australia’s LNG position. It also comes as the Persian Gulf faces its worst diplomatic crisis in years after Saudi Arabia and its allies imposed an embargo on Qatar last month.

This means the timing of the announcement is likely to be seen through a political prism as well as an economic one.

Mr Kaabi said Qatar wanted the production increase to be carried out through a joint venture with international companies.

But he said the emirate would still go ahead with it even if Saudi Arabia and its allies made good on their threat to sanction any international firm working with Qatar if it failed to meet their demands.

“If there are no companies willing to work with us, we will do the 100 million tonnes,” he said

Most forecasters see a current glut of LNG production, spurred by new projects in Australia and the US, to last until 2023.

This is what has given Woodside confidence to pursue its latest plan to pipe gas 900km from the Browse Basin fields to the North West Shelf LNG plant to export in the mid 2020s.

Wood Mackenzie analyst Saul Kavonic said that if implemented, the Qatar expansion would be add more than 20 million tonnes of LNG to the market over current forecasts. “Qatar has the ability to do that at very low cost. It would still be value accretive in the current depressed LNG conditions," Mr Kavonic said. “This would exacerbate oversupply and push back timing under when the market rebalances.”

Wood Mackenzie tips the market to rebalance in 2023, when global LNG demand will grow to 400 million tonnes a year.