Interview: Sheikh Khalid bin Khalifa Al Thani

Given increasing planned production within the liquefied natural gas (LNG) industry, what markets are you targeting for expansion?

SHEIKH KHALID BIN KHALIFA AL THANI: I cannot elaborate on specific markets that we target but our customer portfolio demonstrates that we are a globally diversified player in the LNG market, having delivered to 24 out of the 29 LNG importing countries so far. We have LNG agreements with numerous buyers across the globe and will continue to pursue contracts that make sense for the company and for the state of Qatar. We do see substantial LNG demand growth in the Asia-Pacific region, but in the Middle East we are witnessing a strong appetite for LNG to fuel growing economies and populations.

How does the prospect of increasing gas production internationally impact contractual agreements signed with LNG customers?

SHEIKH KHALID: Our first goal is to safely and reliably deliver LNG in accordance with our commitments under our contracts. In this highly competitive LNG market, Qatargas has successfully demonstrated a willingness and ability to market LNG worldwide through various means, including commissioning cargoes, spot cargoes and short- and long-term volumes. Today we are a reliable supplier of LNG and we believe that this will enable us to meet global demand for decades to come.

What impact will production in Australia and the US have on LNG pricing?

SHEIKH KHALID: History has taught us through the various LNG industry cycles that demand over time will be met by capacity additions as long as the incentives are provided that encourage project developers to invest. Despite the current delivery projections and intense level of activity on the supply side, underpinned by conventional and unconventional developments in Australia and the US, unlocking potential frontier resources in East Africa, Canada and the East Mediterranean will take time. Effectively, we therefore believe that gas prices will remain predominantly linked to oil prices outside of the liquid gas markets of North America and the UK. This will allow all LNG industry players, including buyers, sellers, financiers and governments, to earn reasonable rates of return on their required longterm investments. Furthermore, we believe that oilindexed pricing will benefit the buyer because it leads to stable supplies and prices to end-users.

How do you foresee LNG spot prices performing in the medium to the long term?

SHEIKH KHALID: Forecasting future prices is a very tricky enterprise and in all fairness I would rather leave that to the academics. Today we are seeing a market that has a growing appetite for LNG, awaiting new LNG supply capacity. In the medium to long term I think that, in addition to the capacity increases currently planned, more will be needed to balance the market.

What measures are being pursued to improve value added from associated natural gas products?

SHEIKH KHALID: We at Qatargas are very proud to be a key contributor in the realisation of Qatar’s vision to diversify the utilisation of hydrocarbon resources and maximise the opportunities from the development of the North Field. The Laffan Refinery, which is operated by Qatargas is an example. The development of the Laffan Refinery 2 project will generate revenue from the supply of refined products like naphtha, kerosene, gasoil, liquefied petroleum gas (LPG) butane and LPG propane into domestic and export markets. Laffan Refinery was the first condensate refinery built in Qatar with a capacity of 146,000 barrels per day (bpd). Laffan Refinery 2 is the second condensate refinery and once completed, by the third quarter of 2016, it will double the condensate refining capacity to around 300,000 bpd. Designed to meet the most stringent environmental standards, all of Laffan Refinery’s products will be treated to obtain ultra-low sulphur content and thus to achieve the highest quality in the market.