Some $380bn earmarked for spending worldwide on oil and gas projects up to 2020 has been shelved due to a lack of confidence by investors caused by the low oil and gas prices, Qatar’s Minister of Energy and Industry has said.
Speaking to Gulf Times on the side-lines of the Middle East and North Africa Energy conference held at Chatham House, London, yesterday, Dr Mohamed bin Saleh al-Sada, said, “Some of this money was intended for additional oil and gas and some of it to maintain the naturally declined production.”
“That money has now been removed from projects which were to be implemented up till 2020. Therefore, we expect that the oil production will not increase as it was supposed to because of the removal of that amount of money due to the fact that investors can’t see a return on their investments because of low oil and gas prices,” al-Sada said.
He added: “That could lead to the possibility of an oil shortage down the road in two or three years’ time. The possibility is there for another oil price surge to high levels.”
With regard to LNG, he predicted increased demand due to the fact that ‘many of the consumers can see a lot of benefits to using gas as the price is lower and it is an environmentally acceptable form of fossil fuel — being the cleanest’.
The acceleration in demand he said “will help balance the market, hopefully within a few months.”
Looking at other producers in Angola, Australia and the US, Qatar, he said, is ‘in an extremely competitive, comfortable position’ because it enjoys ‘First-Mover’ advantage.
He said this was due to the vision of Qatari leadership, who ‘went full blast in developing LNG at a difficult time when there were no financiers, no customers and no partners’.
The fact that the decision was made to go ahead twenty years ago against techno-commercial constraints and build the biggest LNG terminal means that Qatar today enjoys a pole position in the market with low production costs and proven reliability, he observed.
“We are by far the most competitive producer of LNG simply because we captured the market and the low cost of development,” he said.
Al-Sada continued: “We were then able to join up the dots on the value chain — production, processing and storage facilities and also the shipping fleet and many terminals which we built and own. The full chain would have been extremely difficult under today’s circumstances had we not been a ‘first-mover’.
Qatar, he said, had proved itself to be a reliable supplier all over the world and especially to terminals where Qatar has majority ownership.
With regard to the South Hook LNG terminal at Milford Haven in Wales, al-Sada noted that over half of its capacity has still to be used. “When the UK market requires more LNG the capacity is available in Qatar and the capacity of the terminal is there; I would guess the UK only uses half of the terminal capacity at the moment. Qatar can be a reliable supplier today and tomorrow,” he said.
He concluded with a comment about the market overall: “It is not a matter of available gas or resources or reserves. Now, the matter is who can produce and deliver competitively, safely and reliably. I think we have that edge and no other country has such a reliable track record as Qatar.”
