Qatar Energy will become the world's largest LNG trading company

Saad Qaabi, Minister of Energy of Qatar and CEO of Qatar Energy Company, said in London on October 5 that his company would become the world's largest LNG trading company in the next 5-10 years, which is currently occupied by Shell.

After the geopolitical conflict broke out, Europe became the main market for this kind of marine fuel. Europe purchased a large amount of LNG to help replace the pipeline natural gas, which used to account for nearly 40% of the imports of the European continent.

Analysts estimate that in the next 10 years, Europe will need to import about 200 million tons of LNG to phase out pipeline natural gas from large capacity countries. In 2020, LNG prices will rise from a record low of less than US $2 per million BTUs to a high of US $57 in August this year.

At the Energy Information Forum held in London, Kaabi said: "Our annual LNG trading volume is about 5 million to 10 million tons. In the next 5-10 years, we will become the world's largest LNG trading company."

Qaabi said, "We started LNG trade about two years ago. I want to say that the profitability of Qatar Energy Company may be 20 times that I imagined."

Qatar is already the largest LNG exporter in the world. Its northern oil field expansion project will enhance this status and help ensure the long-term natural gas supply to Europe, because the European continent is looking for energy sources that can replace the natural gas supply of large capacity countries.

The price of LNG spot goods soared from about 15 million to 20 million US dollars two years ago to 175 million to 200 million US dollars, thus consolidating the transactions in the hands of a few major LNG traders.

It is estimated that the total investment portfolio of Shell and Total Energy is 110 million tons, while the current market is estimated to be 400 million tons.

The investment portfolio of Qatar Energy is estimated to be 70 million tons, and that of BP is estimated to be about 30 million tons. The remaining four companies occupy more than half of the market.

The oil field expansion project in northern Qatar, the world's largest liquefied natural gas (LNG) project, includes six LNG production lines. By 2027, Qatar's annual liquefaction capacity will increase from 77 million tons to 126 million tons.

Qatar has signed an equity agreement with Total Energy, Shell, ExxonMobil, ConocoPhillips and Eni on the first phase of the Northern Oilfield Expansion Project, Northern Oilfield East (NFE).

Total Energy will invest about US $1.5 billion in the Phase II North Oilfield South Area (NFS) project.

Kaabi said that three partners will join the NFS project, which belongs to the same group as NFE, and added that the signing ceremony will be held soon.

European Transactions

Qaabi refused to comment on the progress of the negotiations on the supply of LNG to Germany, and the two sides had differences on key terms such as the contract term and pricing. Industry sources told Reuters in September that the two sides are expected to reach a compromise soon.

Qaabi said that, in a "hub based market" such as Europe, it is usually difficult to lock in long-term natural gas agreements. In Europe, LNG pricing is generally closely related to natural gas pricing.

Qatar prefers long-term contracts, usually linked to oil prices, to maintain stable income, and has signed long-term LNG agreements with Asian buyers for 15-20 years.

Kaabi said: "If there is a better market, unless someone is willing to pay the opportunity loss, I will have no motivation... In a hub based market, it is difficult to have a hub based fixed supply."

Dealers estimate that Qatar's annual LNG export capacity is about 106 billion cubic meters, including about 90% - 95% of long-term contracts and 5% - 10% of spot contracts.