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Qatar plans to boost LNG production

Qatar topped up its expansion plan for its vast liquefied natural gas (LNG) production facilities after drilling and appraisal work at its gas fields and now expects to produce 126 million tonnes a year (mtpa) by 2027.

The announcement by the world’s biggest LNG supplier comes as prices for the super-chilled gas languish at multi-year lows thanks to a surge in production from the United States, Russia and Australia. LNG-AS

The increased expansion plans, however, may not be enough to keep rival producing countries at bay who are fast closing in on Qatar’s dominance of the opaque but fast-growing market.

The chief executive of state energy giant Qatar Petroleum, Saad al-Kaabi, said on Monday the rise in output estimates is a result of new drilling and appraisal work in the expanded North Field mega field that confirmed gas reserves now exceeded 1,760 trillion cubic feet.

“These results will ... enable us to immediately commence the necessary engineering work for two additional LNG mega trains with a combined annual capacity of 16 million tons per annum (mtpa),” Kaabi told a news conference in Doha.

“This will raise Qatar’s LNG production from currently 77 million tons to 126 million tons per annum by 2027, representing an increase of about 64%.”

Qatar’s expansion plans, announced earlier on a smaller scale in 2017 and 2018, are seen as a lucrative opportunity, given the size of the development and easy access to gas, for oil majors who have showered Qatar Petroleum with some of their prized ventures for a role in QP’s projects.

QP had said it was lifting its LNG production to around 110 million tonnes per annum by 2024, and that it would build four new production facilities, known as LNG trains.

Kaabi said on Monday the timeline was extended for the additional production.

“Now that we have added two mega trains and 16 million tonnes, the (new) target has become 126 million tonnes and this of course needs a longer period so this will be achieved in 2027,” he said.

The allure is cheap gas from the North Field, the world’s biggest natural gas field which Qatar shares with Iran. Qatar’s gas extraction costs are some of the lowest in the world.

QP did not disclose the cost of expansion, but it is expected that the expansion phase will still cost dozens of billions of dollars.


Qatar has dominated the LNG market for over a decade and has been able to influence its mechanisms such as bedding down inflexible supply contracts with very long-term buyers.

But this power has been eroded with the rise of other producers especially in the United States, which have shaken up the market with looser and shorter contracts.

The currently oversupply market comes partly from a rise in U.S. production from below a tonne in 2015 to an expected 40 mtpa this year. Australia, also, has splashed out on big LNG projects and Wood Mackenzie expects the country’s production to be on par with Qatar’s from next year until about 2024.

Later in the decade, the United States will vie for top spot with Qatar although this latest plan from QP will make U.S. companies, private with little state support, more hesitant to finalise projects if the market becomes oversupplied again.

“(Qatar’s plans) will put more pressure in the post-2025 period. We forecast the market to remain relatively oversupplied for the next two years before tightening 2022 to 2024 and the second wave of LNG coming (on stream),” Giles Farrer, research director global LNG at Wood Mackenzie.

“We’re expecting at least one other U.S. project to go ahead. Will those other ones still be able attract sponsors — that will be the question.”

Kaabi told Reuters in September that QP has short-listed international oil firms for a stake in its expanded North Field mega project, but may still choose to go it alone unless oil majors offer it significant value.

Qatar’s total hydrocarbon output will also rise to 6.7 million barrels of oil equivalent per day (boed) from around 4.8 million boed in the next eight years, Kaabi said.

Additional reporting and writing by Rania El Gamal in Dubai and Sabina Zawadzki in London; Editing by Ghaida Ghantous, Ed Osmond and David Evans

Copyright © 2019. All market data is provided by Barchart Solutions. Futures: at least a 10 minute delay. Information is provided 'as is' and solely for informational purposes, not for trading purposes or advice. To see all exchange delays and terms of use, please see disclaimer.

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