Interview: Khalid bin Khalifa Al Thani, CEO, Qatargas
How is Qatargas planning to mitigate the effects of what are expected to be major shifts between excess supply and demand in the next five years?
KHALID BIN KHALIFA AL THANI: Our strategy is to continue working on cost-effective, reliable production and to be competitive in a wide range of market conditions, building on our substantial asset and resource base.
Moving towards 2030 global demand for LNG is expected to reach approximately 560m tonnes per annum (tpa), representing an increase of almost 200m tpa from current production levels. With such an outlook, we are confident that there will be a global sustained LNG demand to offset the volume we produce, as we expand our production by 64% to 126m tpa by 2027. The main drivers of this demand increase are China, India and emerging markets such as Thailand, Pakistan and Bangladesh.
Long-term economic growth in these countries will require more use of gas in their power, industry, transportation and residential sectors. Additionally, considering that domestic gas production in most of these countries is in decline, and with the existing gas infrastructure and capacity available, LNG will be the best fuel to replace the demand gap.
The cost of production is fundamental to ensuring the competitiveness of our product in the market. We have yet to maximise the benefits of considerable brownfield synergies with our production facilities and shipping fleet, and the scale of our expansion project will allow us to realise many project efficiencies.
Following the merger of Qatargas and RasGas in January 2018, the new Qatargas has reached higher levels of operational efficiency and cost effectiveness through a combined pool of talented resources and capabilities. As of January 1, 2020 we have completed the integration of our operational assets in Ras Laffan into a single, synergised organisation with one support service infrastructure. This new organisation is designed to manage and operate our existing assets as efficiently and responsively as possible, and is ideally adapted to seamlessly integrate the operation of future expansion projects.
What role will natural gas play in the future of emerging economies around the world?
AL THANI: The global population today has become more aware of the issues of climate change and air quality. Global warming and the need for cleaner fuels are topics that have been discussed intensely at both national and global levels, most recently at the COP25 UN Conference on Climate Change, which was held in Madrid in December 2019.
Government policies and regulations will be the drivers for a transition to cleaner energy. New governmental policies are being implemented in emerging markets to move away from the use of carbon-emitting fuels. For example, China’s 13th Five-Year Plan and Clean Winter Heating Policy support a coal-to-gas transition. China is also in the process of liberalising its gas market, creating a single, midstream company as well as allowing third-party access at LNG terminals and investing in new gas pipeline infrastructure, which together will make gas more competitive. These policies will increase gas demand throughout China.
Similarly, in India the government is moving towards a gas-based economy and aiming to achieve a GDP of $5trn by 2025. Some $68bn has already been invested in gas pipelines and city distribution networks, bringing affordable gas to 70% of the population. India is also working to increase the share of gas in its energy matrix to 15% by 2030, up from the current level of 6%.
Renewables are also an option for cleaner energy in India and in other parts of the world. Large solar systems and wind farms are great investment opportunities for emerging economies, but they will require a significant amount of capital. Additionally, renewables will need gas as a partner to mitigate the volatility that is inherent with the production of renewables.
Read More from OBG
