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Sunday, June 13, 2021

Qatar plans to dominate the liquefied gas market with a $ 29 billion project

The world’s largest exporter of liquefied natural gas is drastically increasing its production and undermining competitors in an attempt to drive them out of the market.

Qatar has lowered its prices and is moving ahead with a $ 29 billion project to increase its exports by more than 50%, hindering prospects for establishing new projects elsewhere. It has also created a trade team to compete in the emerging spot market and enter Asia more strongly, according to people familiar with the matter.

The strategy represents a shift for Qatar, which has barely increased its production over the past five years and has traditionally given priority to prices over market share. Increased competition, especially from the United States and Australia, has forced the Gulf state to become smarter and attract buyers in Asia, which is a hot region for gas demand.

The global shift to renewable energy increases the country’s sense of an urgent need to develop its production. Until recently, LNG was touted as a bridge from coal and oil to solar and wind energy, but it is not getting the attention of some governments that are stepping up efforts to slow climate change.

A struggle for the lead
“The expansion plan in Qatar is so massive that it raises questions about the need for other supply options; Although it is still in the lead, the United States has never been this close before, so Qatar needed to act if it wanted to maintain its leading position. ”

The United States came close to surpassing monthly Qatari exports for the first time in April, while Australia was close to the Middle Eastern country last year, according to ship-tracking data compiled by Bloomberg. As Gulf Coast projects develop, the United States is set to briefly become the world’s largest supplier by 2024, before Qatar regains that position later in the decade, according to Bloomberg NEF.

Several factors play a role in Qatar’s interest. China, one of the fastest-growing LNG markets, has been reluctant to import more from the United States or Australia due to trade and geopolitical tensions, but the main advantage of Qatar is that it has the lowest production costs in the world thanks to the abundance of easy-to-extract gas, as most of it is found in the field. The giant north extends into Iran.

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