Qatar and the evolving global gas markets -

Abstract

The liquefied natural gas (LNG) market is currently dominated by Qatar. Between the two Qatari LNG producers, Qatargas and RasGas, the Gulf energy giant has a nominal export capacity of just over 77 million tons per year – representing about a third of the global LNG market in 2014. However, the structure of the LNG market is set to change dramatically in the coming years. New sources of LNG supply and the uncertain trajectory of demand will put pressure on Qatar’s position in key LNG markets. Most importantly, significant new LNG volumes will target Asia Pacific demand centers from Australia and North America, eroding Qatar’s influence in Asia Pacific – home to the world’s largest LNG markets. The ongoing moratorium on new gas developments at Qatar’s North Field – where reserves may top 900 trillion cubic feet – handicaps the country’s efforts to respond to the changing LNG market. Qatar has no plans to expand LNG production capacity and would be unable to do so in the light of the ongoing North Field moratorium. In fact, by the end of 2015, Qatar may approach a gas production plateau – at least until it lifts the moratorium or finds success in its thus far disappointing drive to explore deep pre-Khuff formations for gas. The thesis also examines the other ways in which Qatar monetizes its gas output (condensate splitting and exports, natural gas liquids output, petrochemicals and gas-to-liquids) and the constraints facing those monetization options in the years ahead. This thesis studies LNG market developments and their impact on Qatar. Because Qatar enjoys the lowest LNG production costs in the world today, it can sustain far lower sales prices than its competitors. Indeed, Qatari LNG will remain profitable in nearly any price scenario. However, Qatar must carefully monitor the market pressures discussed in this thesis: Doha has ambitious and expensive development plans in the works and must take into account the evolving LNG market in its forw