The head of Qatar Petroleum, Saad al-Kaabi, on Tuesday warned there would be a significant shortage of LNG on global markets sooner than expected as he reaffirmed the company’s plans to reach a final investment decision on its domestic LNG expansion project by end-2019.
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Qatar Petroleum revealed in July last year plans to raise the country’s LNG production capacity from 77 million mt/year to 100 million mt/year with the construction of three new mega-trains.
Al-Kaabi was optimistic on future LNG demand given the current state of the market.
“We think the shortage will come much sooner than people anticipate and there is going to be a very big shortage in the market,” al-Kaabi said.
Industry officials expect the LNG market to tighten significantly in the period after 2021 due to a lack of FIDs for new production projects globally over the past few years.
Al-Kaabi said Tuesday that tenders for the FEED contract for the major expansion project have already been released and the process would end in March, followed by the release of an EPC tender.
“We are at the tendering stage for all the rigs and the costs, we will have a good handle on the costs next year,” al-Kaabi said.
A decision on the structure of the project’s financing has not yet been decided, but Qatar Petroleum may choose to finance the expansion entirely through its own balance sheet.
“We will finance it all from our own financing if we need to, we do not need outside investment,” he said.
Al-Kaabi also said binding LNG supply contracts were not required for an FID to be taken and that the selling strategy for the new volumes could be flexible.
Qatar Petroleum would be willing to consider selling the volumes on long-term contracts or as spot LNG, he said.
Al-Kaabi also played down the embargo on his country’s ports by several neighboring states that came into force in 2017, saying it had initially had an impact on supply chains, “but that’s all over now.”
Qatar Petroleum is also active outside of Qatar, and al-Kaabi said a final investment decision on the planned 15 million mt/year Golden Pass LNG export terminal in the US would be taken within “the next few months.”
All tenders from contractors have already been received and are currently under evaluation.
The project is expected to be operational by 2025 and will give Qatar Petroleum new access to Europe, Latin America and other markets, al-Kaabi said.
Europe was identified as a key market for the company in the coming years.
“We see growth in Europe after many years of stagnation as the European economy recovers and as climate change policies mandate the phasing out of coal,” he said.
Al-Kaabi said he did not expect any impact on Golden Pass as the result of the current US-China trade war, stating that the project’s 25-year-plus lifespan made it sustainable in the long term.
China has slapped a 10% tariff on US LNG imports as part of the ongoing trade war between Washington and Beijing.
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