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

Posted by thegulfblog.com in LNG, Qatar.
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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.

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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.

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

Posted by thegulfblog.com in American ME Relations, LNG, Qatar.
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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.

Qatar: 16% growth in 2010, 1/3 LNG capacity growth and is to supply Dubai with LNG 26, January 2010

Posted by thegulfblog.com in Qatar, The Emirates.
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1 comment so far

For a small country, Qatar continues to put out outstanding figures [though I realise that these things are not related…]. As the title of the article suggests, their economy is predicted to grow by 16% in 2010. Their LNG production is expected to grow from 54 millions tonnes per year to 77 million tonnes by the end of the year. Also it has been announced that Qatar will supply Dubai with up to 37 billion tonnes of LNG per year starting soon. Why Dubai isn’t getting its gas from its sister state, Abu Dhabi, is a mystery…or not.