State-owned Qatar Energy (QE) is moving aggressively to secure long-term contracts to supply liquefied natural gas (LNG) to buyers throughout Asia as it plows ahead with a plan to significantly boost its output and preserve its leading role in a growing global market.
Over the last year, Qatar has signed at least 10 long-term sales and purchase agreements, committing to supply 17.8 million metric tons/year (mmty) of LNG for 10-20 years. Five contracts for 8.5 mmty were signed with China, while another five contracts for 9.3 mmty were inked with Bangladesh, Pakistan, Taiwan, Singapore and South Korea. The deals appear to be part of a broader strategy.
“There has been a lot of conjecture about Qatari strategy…They have a lot of product coming on in the next few years and want to nail down as much long-term sales as they can in an era of decarbonization when the net-zero Organization for Economic Cooperation and Development countries may not be willing or able to commit,” said senior research fellow Jonathan Stern of the Oxford Institute for Energy Studies.
“In addition, they want to get in ahead of new U.S., and maybe Australian, Russian and East African projects, as high prices are emboldening investors to go to final investment decisions (FID),” Stern told NGI.
Additionally, more than 10 of Qatar’s medium and long-term agreements to supply an estimated 16.89 mmty of LNG are due to expire between 2021 and 2025, according to data from the International Group of LNG Importers (GIIGNL).
Supply from legacy projects is growing as existing contracts expire, according to Wood Mackenzie. The firm said new supply from Qatar’s North Field East (NFE) project and the Golden Pass joint venture in the United States, plus the expiry of 20 mmty of legacy contracts, mostly in North Asia, means over 60% of its portfolio is uncontracted by the end of the decade.
About two-thirds of Qatar’s LNG exports are delivered throughout Asia. The nation has long been one of the world’s leading exporters. Australia surpassed Qatar last year for the first time as the world’s leading exporter, shipping 77.8 mmty overseas, according to GIIGNL data. Qatar exported 77.1 mmty in 2020. and its costs to produce LNG are among the lowest in the world.
Qatar reached an FID on the nearly $30 billion NFE earlier this year, the largest LNG project to be sanctioned in the world. The project would boost the countries overall LNG production capacity to 110 mmty from 77 mmty. The four-train LNG project is scheduled to start production in 4Q2025 and reach full capacity by early 2027.
Qatar plans to award 30% stakes in each of the four trains to equity partners in 1Q2022, QE CEO Saad Sherida al-Kaabi said in September at the Dubai Gastech Exhibition and Conference.
