jump to navigation

Qatar Coming to Grips with New Realities of Global Energy Markets 23, November 2015

Posted by thegulfblog.com in LNG, Qatar.
Tags: , , , , , , , , ,
add a comment

Qatari Liquefied Natural Gas (LNG) carri

The following article was written for and published by the Arab Gulf States Institute Washington (AGSIW). The precis can be found below and the full article can be downloaded from AGSIW (for free) following this link.

__

Qatar has long dominated the market for liquefied natural gas (LNG), an increasingly popular energy source that can be transported great distances, is widely regarded as being cleaner than coal, and fills increasingly important parts of states’ energy mixes. In recent decades, surging demand and relatively limited supply has created a climate for Qatar to exploit its huge gas resources and consequent economies of scale to bestride the market.

In fact, Qatar dominates the LNG market far more than Saudi Arabia dominates the oil market. But this period of dominance is coming to an end. Demand in China that underpinned the industry’s growth is dipping and not being replaced. Across the world from Australia to the United States, to Israel, to Mozambique, large discoveries have been made and high prices encouraged hundreds of millions of dollars of investment in LNG infrastructure. Even with the fall of the oil and LNG prices, which challenges many new suppliers and their costly outlay to establish the necessary LNG infrastructure, Qatar’s dominant position supplying a third of the world’s LNG will be over by the end of the decade.

Though Qatar’s budget revenue fell 40 percent from July 2014 to July 2015, the state began cutting back in 2013 when a new administration led by Emir Tamim bin Hamad al-Thani took power. These cuts were partly driven by a savvy medium-term view of the bearishness of the energy markets. But the new leadership was also making political statements, cutting back on some of the more expensive pet projects of its predecessors such as the Qatar Foundation, which oversees foreign universities in Doha’s “Education City.” The new administration needs to ensure that it does not hamstring the Qatar Foundation – a central engine of the state’s push to diversify away from its hydrocarbon-dominated economy – as Qatar’s dependency on the oil and gas industry remains profound. Yet even with the reliance on oil and gas and the impending end of its dominance in the LNG field, Qatar’s population remains small and its energy supply role prodigious. Qatar will easily be able to manage fiscally if its ambitions remain more limited than before, as the current administration suggests through its more limited policy ambitions.

Advertisements

On Qatar and its LNG competition 21, April 2014

Posted by thegulfblog.com in LNG, Qatar.
Tags: , , ,
2 comments

LNG Tanker

 

Robert Tuttle – a solid reporter when it comes to financial-type things in Qatar and the Gulf – has written a good article on Qatar’s LNG future. Indeed, it’s one of the best I’ve seen recently offering a reasonably rounded snapshot of a crucial issue for Qatar going forward.

He rightly notes that Qatar will face stiff competition in coming decades, notably from Australia. As CNN reported back in 2012 in a snazzy slide-show, six out of the world’s ten most expensive energy projects revolve around Australian LNG. Tuttle’s suggestion that Qatar will be surpassed in 2018 as the world’s largest LNG supplier is entirely plausible. However, it is not quite that simple. The bureaucratic and particularly the environmental red tape in Australia are fearsome and while the investment and political will to push through Australia’s impending LNG domination is formidable and will doubtless win out eventually, the cost and the timescale are open to debate.

Tuttle does not touch on the LNG boom in East Africa, which, though utterly beset with institutional and governance issues, is still probably of a potential magnitude worth considering in such an article [though I should note that apparently the full length article is due out with Bloomberg soon].

The US shale revolution is certainly of relevance to Qatar going forward. Qatar’s decision to invest in a range of ‘competitors’ is a reasonable reaction to this, though its investment in the Golden Pass terminal in Texas is less a savvy assessment of trends and a subsequent engagement in a strategy of diversification as the result of investing in (i.e. building) an importing terminal, which subsequent to the Shale revolution became redundant.

In terms of grumbles about his article, there are a few. Very little started in 1971 with the discovery of the North Field (the world’s largest gas field that Qatar shared with Iran). Indeed, at the time the entire field was dismissed as irrelevant such was the myopic desire for oil. Quoting the Gas Exporting Countries Forum based in Doha makes some sense, but it is entirely unclear as to whether the organisation is of any meaningful, practical use whatsoever.

More importantly, the question of demand is not addressed at all. Certainly, articles have word limits and irascible editors and such, but this issue is not only about supply. Indeed, without considering the potential changes in demand, it is difficult to draw any meaningful conclusions as to the effects of greater supply on Qatar. If demand from East Asia keeps on rising then it is entirely possible that the new supply will meet the demand and the net result will be negligible as far as Qatar is concerned.

Qatar shifting LNG from US to emerging markets 3, November 2010

Posted by thegulfblog.com in American ME Relations, LNG, Qatar.
Tags: , , ,
add a comment

Qatar is to divert LNG from America to Asia and South America. This should come as a surprise to no one. Even though Qatar recently opened a multi-billion dollar LNG regasification plant in Texas, there surely need to be serious questions asked as to its medium term viability.

People have known that huge quantities of shale gas exist in America for decades. However, until (very) recently, there was no economical way to extract this gas. Now that such technologies exist that allow America to exploit this resource, importing terminals such as Qatar’s Golden Pass in Texas look somewhat redundant.

Aside from this potential white elephant, the fact that Qatar may lose America as an important client is more of a disappointment rather than a catastrophe. Clearly, Qatar would have liked to establish an energy relationship with America. Regularly supplying a meaningful percentage of US gas would give Qatar if not influence or sway then at least more respect in some nebulous way. Perhaps it would make US officials more reticent in criticising Qatari policies (it seems to work that way with Saudi Arabia).

Indeed, Qatar would ideally like to improve their relations with America which are – frankly – not very good. This much was admitted by the Emir in his recent FT interview. An important energy supplying relationship could have gone some way to establishing another point of commonality. At the moment, the Qatar-US relationship is based primarily on the fact that both of them know that the other can’t do without the stationing of US troops at Udeid (and other) bases in Qatar. This isn’t the most ‘positive’ basis for a friendship.

Overall, the demand for gas is strong. Not only are the emerging markets likely to experience practically continual growth for the foreseeable future but gas is a relatively ‘green’ fuel, further increasing its attraction.

Gulf countries to invest $100bn in Gas industry 9, March 2010

Posted by thegulfblog.com in Iran, LNG, Qatar.
Tags: , , ,
1 comment so far

MEMRI quotes MENAFN reporting that Gulf countries will be investing up to $100bn in gas technologies in the coming decade. Presumably the majority of this will be in Qatar and Abu Dhabi. Whilst there are relatively sizable fields in Saudi Arabia, their priorities are firmly set on oil. Iran has staggeringly large supplies but simply don’t have the ability to invest as heavily.

Qatar and Iran: on top in Middle East’s gas shortage 2, June 2009

Posted by thegulfblog.com in Kuwait, LNG, Middle East, Qatar.
Tags: , , , ,
add a comment

lng-qatar-kuwait

Irony, schadenfreude, poor management or just life, call it what you will but there is going to be a critical shortage of gas in the Middle East according to the FT. Such a notion goes against the grain of popular perceptions of the Middle East as region, for if the region is know for anything it is for its oil. People might assume, therefore, that because of the plentiful supplies of one carbon-based fuel, that there might be equally plentiful supplies of another. To a fair degree such an assumption is correct. Qatar and Iran are two of the top three countries in the world by proven gas supplies. Other Middle Eastern countries have more modest but still far from insignificant supplies. Saudi Arabia has over 7 trillion cubic feet (tcf) of gas supplies at 4% of the world’s proven reserves, the UAE has over 6 tcf of reserves at 3.4% of the world’s supplies and Kuwait has nearly 2 tcf of proven reserves. Compared to their oil reserve equivalent, these supplies are fairly paltry, but compared to, for example, their populations (around 27, 4.6 and 2.6 million respectively) they ought to be easily sufficient. Yet this is clearly not the case if the judicious and sober FT are declaring their need to be ‘critical’.

There are various reasons as to why most GCC states find themselves in this somewhat perplexing situation. Many of these countries have, as the article’s author Andrew England states, a highly escalating demand for energy spurred on by burgeoning populations spending the wealth accumulated in the recent oil-fueled boom. Furthermore, the myopia that the oil fueled boom seems to have instilled on the region in terms of a lack of significant investment in any other industry seems to have further exacerbated issues. Gas, it is now starkly evident, is crucially needed “for power generation, desalination plants and to provide feedstock to the energy intensive industries they have been seeking to lure.” The problems are particularly acute in the summer months when demand for AC is at its peak.

Whilst the recent economic troubles that have afflicted the region have momentarily taken the edge off the gas needs with its dampening effects on demand overall, this is but a temporary phenomenon and “the medium and long-term outlook remains critical.”

Such a situation is, of course, not that bad for Qatar and Iran. Both these countries, sitting atop mountainous stores of gas and sharing the world’s largest gas field, gain extra strategic importance. Kuwait and Qatar are currently in talks over a 5 year supply deal worth around 1.4 million tonnes of LNG per year. Yet, as England notes with an interview with Qatar’s oil and gas minister, Qatar will not necessarily sell their gas to their neighbours for “at the end of the day I [the Minister]  am concerned about what is the best revenue for the country…I’m not in a social security game.” Qatar already has the Dolphin pipeline sending gas to the Emirates and then on to Oman. This can be seen through a pessimistic or an optimistic prism. Either Doha can now exert more authority over the Emirates and Oman or this closer reliance will bring the countries closer together. A Russian-Ukrainian style threat to turn off of the pipes is highly unlikely, outwith extreme provocation or a severe deterioration of relations. And in much the same way, the countries are different, independent and competitive enough to avoid some kind of harmonious new relationship. As usual, the practice will most likely be somewhere in the middle with all concerned knowing that a touch more power has just been ceded to Qatar. Expect their attempts to diversify their supply or seek nuclear technology to increase.

Picture from LNGpedia

Original FT article

China’s LNG Terminals 2, June 2009

Posted by thegulfblog.com in China, LNG.
Tags: ,
add a comment

China LNG TerminalsHat Tip: LNGpedia

Article catch up 29, May 2009

Posted by thegulfblog.com in Bahrain, China and the ME, Egypt, French IR, LNG, Middle East.
Tags: , , , , , , , ,
add a comment

– Interestingly, it is being suggested that Turkey might be acting as an intermediary for America in persuading Kyrgyzstan to retain their US base.

– MEI blog and Marc Lynch on Obama scheduling a visit to Riyadh just before he gives his much-hyped speech in Cairo.

Commentary on Bahrain’s new proposals to augment migrant worker’s rights being significantly watered down by business interests.

Bomb at Iranian mosque in the run up to the elections.

– Thailand building LNG regasification facilities to receive LNG from the Middle East.

– Yemen are about to join Qatar et al in the exporting of LNG.

– On the Middle East’s expected increase in defense spending.

– Marc Lynch on the importance of Arab opinion polls.

– MEI blog on the Iranian un/blocking of Facebook and Microsoft’s bizarre decision to ban Messenger in various embargoed countries and on the French base in the UAE.

– China is now the largest exporter to the Middle East having over-taken the US. Hat tip: Silk Road Economy via the Arabist.

– On the possibility of China creating its own Al Jazeera.

– On the surprisingly close Israeli-Iranian relations below governmental level. See also ‘Treacherous Alliances.’

Qatar’s LNG: a brief overview 27, May 2009

Posted by thegulfblog.com in Iran, LNG, Qatar.
Tags: , , , ,
add a comment

qatar-north_field

Here are a few salient facts about Qatar’s LNG production today and in the future.

Qatar produces:

– 33 million tonnes per year of LNG  in 2008

– 60 million tonnes per year of LNG in 2009

– 70 million tonnes per year of LNG by 2012

– This 2012 target will amount to roughly 30% of the world’s LNG needs

– This will make them far and away a proportional bigger supplier of LNG than Saudi Arabia is of oil who supply around 12-13%

– One full cargo of the largest Qatari tanker is sufficient to heat every UK home for a day

– Qatar shares the world’s largest gas field with Iran – some 6000 square meters

– Current estimates suggest that it holds around 900 trillion cubic feet of gas

– It is expected to last for more than 100 years

– Qatar Petroleum are believed to have invested around £40billion in oil and gas in 2008-2010 alone

Sources:

Nadim Kawach © Emirates Business 24/7 2009

LNGPEDIA is an excellent aggregation source for LNG related topics.

The BP statsitical review is an unbeatable source for energy data.

Adding Value in the LNG Supply Chain‘ Bjorn Moller. ONS Conference.  Stavanger, August 24, 2006

Article catch up 25, May 2009

Posted by thegulfblog.com in Kuwait, Lebanon, LNG, Middle East, Qatar.
Tags: , , , , , , , , ,
add a comment

Here’s a selection of the weekend’s best articles that caught my attention:

  • Brian Ulrich has an excellent article, summarised on this blog and in full on the Arab Media and Society journal, discussing blogs as but the latest communicative media in the Middle East. It is wide-ranging, interesting and well worth a read.
  • The Arabist quotes Guy Gabriel at the Palestine Chronicle and his trawl of all available media stories concerning the supposed Israeli attack on the arms convoy in Sudan.
  • Der Spiegel highlights new evidence that the assassins of Hariri in Lebanon was actually Hezbollah’s special forces and not directly Syrian backed…But many in the media, including Joshua Landis are less than convinced about this story’s veracity. He eloquently sketches out the (many) reasons for his scepticism here.
  • Foreign Affairs has an article discussing the various lobby groups operating in Washington DC.
  • The FT on the great scramble for African land:  “they’re almost giving it away.”
  • Qatar’s ever closer investing, importing and exporting relationship with Indonesia.
  • The Economist on Kuwait’s elections and future difficulties.

Royal visit for opening of LNG terminal 12, May 2009

Posted by thegulfblog.com in LNG, Qatar.
Tags: , , , , ,
add a comment

LNG Tanker

Members of the British and Qatari royal families will visit South Wales to celebrate the opening last month of a new Liquefied Natural Gas (LNG) terminal. Eventually, it is expected that the UK will receive up to 20% of its gas needs from Qatar via South Hook and Port Talbot in Wales. In an excellent summary, the key paragraph from the BBC states that:

The UK is now the world’s fastest growing market for imported gas and now has a direct link with Qatar, the world’s biggest LNG exporter.