Interview: Sheikh Khalid bin Khalifa Al Thani
In what manner will the construction of Laffan Refinery 2 (LR2) impact national condensate production in the future?
SHEIKH KHALID BIN KHALIFA AL THANI: Laffan Refinery 1 (LR1), along with its expansion project, LR2, is yet another step towards realising Qatar National Vision 2030 (QNV 2030). It is of strategic importance, as it will contribute to diversifying Qatar’s energy mix and further strengthen our capacity to respond to the country’s changing needs and future challenges. Qatar is the largest condensate producer in the world, with a condensate-refining capacity of 146,000 barrels per day (bpd) produced by the Laffan Refinery Company operated by Qatargas. With the LR2 expansion project, this capacity will increase to 300,000 bpd, which is expected to be completed in the third quarter of 2016, producing high refinery products such as naptha, kerojet, ultra-low sulphur diesel, propane and butane for local and international markets.
How will the Jetty Boil-Off Gas (JBOG) recovery facility reduce gas flaring and emission levels in Qatar’s liquefied natural gas (LNG) industry?
SHEIKH KHALID: The JBOG Recovery Project will reduce the carbon footprint of the 77m tonnes per annum (tpa) of LNG production facilities to the minimum practically possible level, contributing to one of the main pillars of QNV 2030.
A landmark environmental project for the state, the JBOG facility started operations in October 2014, and after just one year in operation, it safely recovered approximately 535,000 tonnes of LNG. Eventually, it is estimated that JBOG recovery will result in a saving of approximately 1trn cu feet of gas over a period of 30 years.
The JBOG recovery system can recover up to 163 tonnes of gas per hour. With full LNG production of 77m tpa, flaring at Ras Laffan Industrial City LNG Terminal is estimated to be an average of 700,000 tpa, or around 100m cu feet per day. The JBOG recovery project will result in a 90% reduction in flaring at the six LNG loading berths. At full operational capacity, the facility will recover the equivalent of 600,000 tpa of LNG, which is enough natural gas to power more than 300,000 homes.
What impact will the volatility of oil prices in 2016 have on Qatar’s LNG market and, more broadly, on the LNG market internationally?
SHEIKH KHALID: Since mid-2014, global energy markets have been going through a fundamental rebalancing. Energy supplies have risen relative to demand, and the result has been an unprecedented fall in prices. This has happened at a time when major new supplies of LNG are scheduled to enter the market over the next few years. Market conditions have prompted many energy-producing companies to delay or cancel projects, and seek other ways to rationalise costs. Furthermore, the near-term outlook has prompted some analysts to predict that energy prices will stay lower for longer.
Energy price volatility inevitably creates uncertainty around the viability of energy project development. We believe that the current market environment highlights Qatar’s unique position as a global LNG supplier in that our integrated business model – upstream reserves, midstream processing, downstream marketing and transportation – affords us the ability to take a long-term view.
Given our scale, the integrated business model we have adopted and our long-term commitment to the business, we believe that the clearly defined benefits of using LNG as a primary fuel source will inevitably bring supply and demand back in line. Over time, the advantages of using LNG as a source of clean energy will have the effect of stimulating demand and bringing prices back to a level that is mutually beneficial for both producers and consumers.
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