DOHA: Qatar’s reign as the world’s largest liquefied natural gas (LNG) exporter may end by 2017 as liquefaction capacity in Australia reaches 120bcma (billion cubic metres per annum), and new supplies from the US begin to kick in; but Doha is taking an “aggressive” stance in Europe to mitigate the risks, according to Arab Petroleum Investment Corporation (Apicorp).
Several factors have historically provided Qatar with a competitive advantage over its rivals, and may yet do so against new supplies, given its large sovereign wealth cushion, Apicorp said in a report.
“The new LNG supplies from Australia have already started to eat into Qatar’s monopoly in Asia and new supplies from the US will challenge Qatar’s dominance,” it said, highlighting that the proportion of Qatari LNG into Japan, South Korea and China fell 3.6% in 2016 as Australia increased its share in the three countries by 8.4%.
Qatar is thus facing a new reality where Asian importers now have more options, whilst low prices and more supplies in Europe mean that Qatar will need to offer more flexible contracts, it said.
However, in some of these key importing countries, its exports have diversified, with the number of Qatari LNG importers tripling from eight in 2007 to 24 in 2015. In Asia, its share of imports into China and Taiwan has increased modestly.
In India, LNG traded close to Japanese prices at $4.9/mmBtu prompting the amendment to Qatari export terms and the provision of cheaper gas – down to $6-7/mmBtu this year from $9.2mmBtu in 2015. As part of the deal, Petronet – set up by the Indian government to import LNG – agreed to import an additional 1.3bcma from RasGas.
Finding that Qatar is also keen to increase its presence in Europe by offering more flexible terms; Apicorp said Qatargas 3 – a joint venture among Qatar Petroleum, ConocoPhillips and Mitsui – will deliver 1.5bcma to RWEST in North West Europe over seven and a half years.
Separately, RasGas, which already provides UK-based EDF with 11bcma, signed an agreement to supply their new import terminal in Dunkirk with 2.7bcma. Higher exports in 2015 to Europe increased Qatar’s market share in the region by 3.3% year on year (y-o-y).
Qatar also brokered a four-year deal earlier this year to supply Kuwait with 0.7bcma from March. Recently, Qatar Petroleum (QP) signed a deal with Abu Dhabi National Oil Company to enhance supplies to the UAE via the Dolphin pipeline. Furthermore, QP has taken advantage of its domestic joint ventures to forge their first major foreign partnership with ExxonMobil, and their interest to purchase shares in both Mozambique and Egypt’s Zohr field.
