Qatar on Sunday advanced plans to increase the country’s LNG production capacity by 85% from current levels, upping a bet that more natural gas will be needed as progress at other liquefaction projects appears to slow.
CEO Saad Sherida Al-Kaabi, of state-owned QatarEnergy, said an appraisal program had determined that the productive layers of the country’s massive North Field extend towards the west. Testing confirmed that 240 Tcf of additional gas reserves are present, boosting Qatar’s overall gas reserves to more than 2,000 Tcf.
“These are very important results of great dimensions that will take Qatar’s gas industry to new horizons,” Al-Kabbi said. He added that the additional reserves would allow the company to move forward with the 16 million metric tons/year (mmty) North Field West (NFW) liquefaction project in Ras Laffan in the north of the country.
Along with the multi-billion dollar North Field East (NFE) and North Field South (NFS) projects that were sanctioned in 2021, NFW would boost Qatar’s liquefied natural gas production capacity to 142 mmty by the end of the decade.
QatarEnergy has already started construction on the North Field expansion project, bringing aboard international energy majors to partner in both NFE and NFS. Al-Kaabi said the company would “immediately commence” basic engineering work on NFW to ensure the project stays on track.
With NFW, Qatar is doubling down on its role as a dominant force in the global gas market. In recent years, it has formed a global trading arm to expand in the spot market, embarked on the largest LNG ship-building program in history and expanded its liquefaction portfolio outside of the country. It holds a 70% stake in the 18 mmty Golden Pass export project under construction in Texas that’s scheduled to come online next year.
The decision to move forward with NFW also comes at a time when projects elsewhere in the world face headwinds. New export licenses in the United States, which leapfrogged both Qatar and Australia last year to become the world’s top LNG exporter, have been temporarily suspended. The Biden administration ordered regulators to determine if sending more gas overseas is in the public interest.
“This is a signal of intent by QatarEnergy; and the expansion, plus reserve increases, reassure buyers that while there are uncertainties in other pre-final investment decision projects around the world, Qatar has the volumes,” said Wood Mackenzie’s Fraser Carson, senior research analyst of global LNG.
He added that the “timing is fortuitous,” given the U.S. pause on new export approvals, sanctioned Russian LNG and civil unrest in Mozambique, where a large liquefaction project under development by TotalEnergies SE has been impacted.
Although the gap narrows after 2030, global LNG demand is expected to keep pace with supply, according to Shell plc’s latest LNG outlook. Shell expects LNG demand to rise by more than 50% by 2040 as industrial coal-to-gas switching gathers pace in China and South Asian and Southeast Asian countries use more LNG to support their economic growth.
Despite regulatory uncertainty in the United States, five liquefaction projects are currently under construction on the Gulf Coast. Along with existing facilities, once the new projects come online later this decade, the United States would still have the world’s largest liquefaction capacity of 173.2 mmty, according to NGI’s North American LNG Export Project Tracker.
Houston-based Cheniere Energy Inc., the largest U.S. LNG exporter and world’s second largest LNG producer behind QatarEnergy, said last week it also expects LNG demand to remain strong heading into the second half of the century. In 2023 alone, the company signed long-term sales and purchase agreements representing over 119 million tons of LNG for delivery between 2026 and 2050.
Qatar still has its work cut out for it to sign up customers. In addition to the 16 mmty of new LNG from NFW announced over the weekend, QatarEnergy still has about half of the capacity from NFE and NFS, or roughly 60 mmty, to market to global buyers.
