In a bid to hold on to the largest gas exporting country status, Qatar invests heavily in newer gas exporting destinations
Qatar, the tiny nation whose vast riches can be attributed to the commercialisation of the abundant natural gas reserves, today stands challenged; the US shale boom could threaten Qatar ‘s leading position in the world of gas.
It was not long ago that a moratorium was imposed on Qatar’s North fields, stalling any future developments, owing to fears over rapid development that would lead to reduced field pressure. However, newer finds adjacent and reassessment of some of the other fields have kept the country’s gas players active.
Most of the gas that comes from Qatar is monetised as liquefied natural gas (LNG). Qatar’s LNG production and export capacity, as established in 2010, totals 77 million mta.
The country exports the fuel mainly to customers in the Asia-Pacific region and Europe. Its plans to develop LNG exports to the US, however, were derailed by the North American shale gas boom.
Qatar may hold the world’s third largest non-associated gas fields behind Russia and Iran, but the loss of North America as a market has forced the country to look elsewhere. Fortunately, the country has developed a contingency plan for its gas exports.
The announcements made by Qatar International in the last six months suggest that the country will maintain its leading export position.
The country is aware of increasing competition from the US and Australia for supplying gas to the energy-hungry Asian Countries, and does not want to lose out in the race.
On May 17, The US Department of Energy (DOE) gave the Freeport LNG facility in Texas conditional approval to export domestically harvested natural gas. If approved, it would be the second time that an American company has won such authority.
The terminal will export 1.4bcf/d. The development, partly owned by ConocoPhillips, Dow Chemical and Osaka Gas still needs approval from the Federal Energy Regulatory Commission.
The US conditionally approved Cheniere Energy’s Sabine Pass LNG Terminal in Louisiana in May 2011 for exports of as much as 2.2bcf/d. The US government has over 20 applications for export terminals in recent months, which if approved, could ship the equivalent of 41% of its total production this year, Energy Department data shows.
The export license allows the Freeport project to sell LNG to Japan, India and other countries the US does not hold free trade agreements with.
This may, at first appear to put Qatar in a tough spot, seeing as their main LNG buyers are Japan, S.Korea and India. But recent reports suggest that Qatar anticipated these developments and is moving to make some strategic investments in other gas-rich regions around the world.
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Qatar-based Petroserv Group has bought a 49% stake in Brisbane-based Bothar Boring & Tunnelling Ltd. The company which will be rebranded as Petroserv International, expects that the initial equity injection by Petroserv Group, which is owned by former Qatar Finance Minister Sheikh Mohamed bin Ahmed bin Jassim Al Thani, will be followed by further significant funding from the company.
No value was given for the initial investment. In April, a study by Lloyd’s Register said Australia could overhaul Qatar to become the world’s largest exporter of liquefied natural gas by 2020. Evidently, Qatar is stepping up investments in Australia, slowly but surely.
In another shrewd move, Qatar is converting an importing facility in the US, meant for receiving gas from Qatar, into an export facility.
State-owned Qatar Petroleum International (QPI) and ExxonMobil unveiled plans in May to develop a $10b export terminal at Golden Pass in Texas. ExxonMobil is the largest investor in Qatar’s gas industry and helped the country monetise its gas fields through LNG technology.
This investment announcement followed another Qatari investment in a Canadian gas facility. Centrica and state-run QP have agreed to buy natural gas fields from Canada’s Suncor Energy for $981m.
The assets, mostly in southern and central Alberta, will be operated by Centrica and produce about 250mcf of gas a day this year, the company said in a statement.
Centrica will own 60% and QPI, 40%. The deal when signed was QPI’s first investment in an overseas gas field and the first by the two companies under a co-operation accord signed in December 2011.
Qatar is not ready to yield its world supremacy in gas. Instead of increasing output from its gas fields, the country is gambling on strategic developments overseas setting the stage for continued global gas dominance. Only time will tell how this strategy plays out.
Biggest gas consuming nations
Japan and Korea are the world’s leading LNG importers, consuming 48% of LNG supplied to the market in 2011, according to the International Gas Union report released in 2012.
This figure was marginally 1% higher than 2010 volumes due to higher demand for Japan after the Fukushima disaster that saw the country’s nuclear power fleet replaced with gas-fired plants.
A second important and growing feature of global LNG imports was the emergence of smaller LNG importers. In developed and emerging markets, gas is becoming the fuel of choice for electricity generation and for support economic growth. Over the last five years, 10 countries have begun importing LNG: Argentina, Brazil, Canada, Chile, China, Kuwait, Mexico, the Netherlands, Thailand, and the UAE.
Notably, three of the eight countries are located in South America and two in the Middle East. The majority of gas is consumed in Asia Pacific region and the next big importer to watch out for may just be Singapore.
