As the world’s largest liquefied natural gas (LNG) exporter, Qatar is increasing its export capacity by 43% and developing its North Field Expansion project, adding about 32 million tonnes per annum (mtpa) of liquefied gas to the market from 2024.
Despite the planned increase in its liquefaction capacity, Qatar is expected to have its proportion in the world’s gas liquefaction capacity reduced from about 20% in 2018 to 14% in 2024 as other major LNG projects, mainly in the US, Russia, Canada and Mozambique, are planned to come online within the next five years.
Countries such as Australia and Russia have already added about 59 mtpa and 17 mtpa respectively to their capacity over the last five years. The US, owing to its shale gas revolution, has also transformed into one of the world’s major LNG exporters, increasing its liquefaction capacity through planned and announced projects.
Demand for LNG has been significantly rising in Asian countries such as Japan, China, South Korea, India and Taiwan, which together are responsible for nearly 70% of the current world’s LNG imports.
The supply market has been successful in meeting the global demand for LNG so far. However, demand is expected to increase at a much faster rate and major LNG exporters such as Russia and Qatar and newly joined countries such as the US and Canada are considering expansion of their liquefaction capacity to meet the global demand.
Qatar benefits from having low upstream costs needed to produce its conventional natural gas, as well as from its desired geographical position and strong reputation in the global LNG market upholding long-term selling contracts.
Compared to other similar projects around the world, estimated economics of the new Qatari LNG project is still favorable, particularly if given the same tax incentives as were applied to earlier joint ventures for LNG development.
Qatar has been able to export its LNG nearly to its full capacity (i.e. almost 94% of capacity utilised) over the last decade. This can be a good indicator of Qatar’s well-secured and established position among the LNG customers.
Although competition is expected to rise amongst the world’s LNG producers, Qatar‘s favorable geographical location, scale of production and low cost base allows for North Field Expansion LNG to have been contracted and sold globally, thus providing certainty of volume offtake.