CHAIRMAN: DR. KHALID BIN THANI AL THANI
EDITOR-IN-CHIEF: DR. KHALID MUBARAK AL-SHAFI

Business / Qatar Business

Qatar needs strategy shift to maintain global LNG title

Published: 17 Oct 2018 - 01:40 am | Last Updated: 01 Nov 2021 - 07:17 am
Dr Ibrahim Ibrahim, Economic Advisor at Amiri Diwan, addressing Carnegie Mellon University-Qatar Dean’s Lecture Series, yesterday. Pic: Salim Matramkot/The Peninsula

Dr Ibrahim Ibrahim, Economic Advisor at Amiri Diwan, addressing Carnegie Mellon University-Qatar Dean’s Lecture Series, yesterday. Pic: Salim Matramkot/The Peninsula

By Satish Kanady I The Peninsula

DOHA: With major changes happening in the global LNG space, both on the supply and demand sides, Qatar needs to readjust its strategy in order to maintain its leading position as global LNG supplier.

Delivering Carnegie Mellon University-Qatar Dean’s Lecture Series here yesterday, Dr Ibrahim Ibrahim, Economic Advisor at Amiri Diwan said on the supply side major challenges are coming from the development of shale Gas in the US and tremendous expansion of LNG supply from Australia. The expected ascendance of LNG positions of Russia and countries in Africa are another major challenge.

Speaking on the demand side, Dr Ibrahim said the real change is coming from the expected expansion of gas consumption in giant economies such as China, India, and Brazil; and from a many smaller and less developed economies. These changes would have impact not only on the level of LNG price; but also on the conditions of sales such as fixed destination, price indexation, the duration and the prevalence of fixed contracts, and the role of the spot market.

In future, Qatar should adhere to the pillars of its already developed LNG strategy which are: fully integrated model, Cost optimisation, Brand name based on reliability, flexibility, loyalty, and strict compliance to its contractual obligations.

Dr Ibrahim wanted Qatar to further intensify the development of its Gas resource. Qatar has recently lifted the moratorium on expanding the production from the North Field, and announced its intention to increase its LNG production capacity by 32million tons. This decision was based on detailed technical assessment of the Field reserve during which a long-term moratorium on expansion was imposed. This announcement is expected to affect future projects from marginal suppliers, and the resulting capacity would allow Qatar to maintain its position as a leading world LNG exporter for years to come.

He said Qatar has to take advantage of the development of shale Gas. While this development would have negative impact on the price level of LNG in the short-term, the impact in the long-term could be positive especially on large Gas suppliers such as Qatar. This development would contribute to lengthening the duration of Gas as viable source of energy.

“Qatar is investing in exploration development and production of foreign oil and gas fields in cooperation with its LNG partners and should intensify its investment in this direction. Such investment, besides its expected direct return would have spill over effects especially on LNG marketing by offering opportunities to transportation swap between the US and Qatar and flexibility in price indexation of LNG.” As a strategy to continue to remain as the LNG global leader, Qatar should not relinquish its advantage as a low cost LNG supplier to its economic and social obligations. Qatar should not repeat the mistake that major oil exporters made by expanding dramatically their fiscal budgets. Such expansion lowered significantly their pricing power, a position that places them on equal ground with high cost exporters.

Qatar needs to invest to support small developing countries to import LNG in the needed infrastructure such as floating terminal (FSRU) and pipelines Gas. It should also concentrate on strengthening relations with the rising LNG importers in Asia and Latin America.

Qatar also needs to intensify investment and participation in research to push the LNG demand into a new high, through the transformation of shipping fuel from heavy oil products to LNG, and enhance the use of LNG in land transportation.