Increasing its LNG Export Capacity, Qatar Has Bet on Asian Demand

Increasing its LNG Export Capacity, Qatar Has Bet on Asian Demand

Following the discovery of substantial new gas reserves, Qatar intends to expand its capacity for producing LNG in an effort to meet the rapidly growing demand from China and other Asian countries.

According to an announcement on Sunday, the action, which follows projected output increases that have been revealed in recent years, will result in an almost 85% increase in the company’s entire production capacity from present levels before the end of the decade.

The Gulf state is placing a wager with these plans that the fuel’s robust demand would endure, with Asian economies moving away from coal in an attempt to reduce carbon dioxide emissions. Additionally, the US is reviewing its own LNG export plans in order to assess the effects on the nation’s energy security and carbon footprint.

The proposals, according to Qatar’s energy minister Saad Sherida Al-Kaabi, will “take Qatar’s gas industry to new horizons.”

Competing with Australia and the US for the top slot, Qatar is already among the world’s major exporters of LNG, or gas that has been chilled into liquid form so that it can be pumped onto ships for export.

It can currently produce roughly 77 million tonnes annually (mtpa), although in recent years, plans have been made to increase it to 126 million tonnes by 2027.

Before the end of the decade, state-owned QatarEnergy plans to add an additional 16 mtpa, bringing the total capacity to 142 mtpa, an over 85% increase over current levels.

Following recent discoveries at its massive North Field gasfield, Qatar increased the size of its gas reserves by around 14% to 2 quadrillion cubic feet. It also stated that a sizable portion could be extracted from the gasfield’s west.

“These are very important results of great dimensions,” who also serves as CEO of QatarEnergy, a company headquartered in Doha.

Following Russia’s full-scale invasion of Ukraine in February 2022, demand for LNG increased as Europe attempted to restore lost Russian pipeline volumes.

Some are using natural gas as a lower-carbon substitute for coal, while Europe and the UK are attempting to minimize their reliance on the fuel to lower carbon dioxide emissions.

The world’s demand for LNG is expected to increase by over 50% to reach 625 million to 685 million tonnes by 2040, according to a report released this month by oil and gas giant Shell. This growth is expected to occur throughout that decade as China and other developing Asian countries transition from coal to gas.

“As we move into the early 2030s, there’s going be huge demand for gas from Asia, and I think QatarEnergy is squarely focused on that,” said Tom Marzec-Manser, head of gas analytics at commodity pricing and data company ICIS.

In the last 15 months, Qatar has successfully negotiated two significant gas supply agreements with China. After reaching a similar agreement with China’s Sinopec in November 2022, it decided in June of last year to sell 4 million tonnes of LNG annually to China National Petroleum Corporation for a 27-year period.

As President Biden stated in January, the US is taking a “hard look at the effects of LNG exports on energy costs, America’s energy security, and our environment.” This coincides with Qatar’s expansion ambitions.