The global liquefied natural gas (LNG) market is projected to grow significantly, reaching 580m-600m tonnes per annum (tpa) by 2030, up from 400m tpa in February 2024. Forecasts suggest that global demand for LNG could rise by over 50% to hit 625m-685m tpa by 2040, continuing to grow throughout that decade. The switch from coal to gas in China and other developing Asian nations is a key factor driving this growth, a trend on which Qatar is in a strong position to capitalise.
Increased Capacity
Qatar was the world’s sixth-largest natural gas producer and biggest LNG exporter in 2022. However, with the country holding 13.1% of the world’s proven natural gas reserves and 32.5% of the Middle East’s reserves at the end of 2020, there is room for significant improvement, as the authorities in the country have signalled. In July 2023 Saad Sherida Al Kaabi, the minister of state for energy affairs, underscored the importance of a pragmatic energy transition. He emphasised natural gas as a dependable baseload source in the energy portfolio for many nations, projecting its relevance beyond 2050. In his view, calls to cancel hydrocarbons are not only unrealistic but also detrimental to a feasible transition.
In 2023 Qatar had an LNG production capacity of 77m tpa, with plans to increase capacity to 142m tpa by end-2030. This expansion is backed by the country’s February 2024 discovery of additional gas reserves at its North Field, increasing Qatar’s reserves by about 14% to more than two quadrillion standard cu feet.
In 2022 Asia was the primary market for Qatari LNG, with Europe the second-largest. QatarEnergy (QE) has engaged in discussions with China’s Sinopec and China National Petroleum Corporation. In 2023 the three entities reached an agreement, with each adopting a stake in a joint venture equivalent to 5% of one LNG train, with 8m tpa capacity and a commitment to offtake one-half of the volume for 27 years. With one-half of the supply from its ongoing expansion still seeking buyers, international oil companies such as Italy’s Eni, France’s TotalEnergies and the UK’s Shell could all see benefits from the increase in output.
In this context, credit ratings agency Fitch Ratings upgraded QE’s outlook from stable to positive in April 2023, affirming the outlook in February 2024. Aligning with a similar sovereign outlook for Qatar, key factors for QE’s outlook include low production costs, conservative leverage, high systemic importance and LNG expansion plans, as well as international growth, including potential partnerships with European companies.
Heightened Competition
Qatar’s ambitious expansion to its LNG capabilities could allow the country to account for nearly one-quarter of the global LNG market by 2030. Furthermore, QatarEnergy Trading, a subsidiary established in 2020, manages any volumes not included in long-term contracts and trades thirdparty LNG. There are plans to expand its distribution fleet to 150 ships, reaffirming Qatar’s position among the world’s top-three LNG traders by 2030.
The execution of Qatar’s plans is likely to have a significant impact on gas project investment worldwide, especially those requiring financing and long-term customer commitments to reach a final investment decision. Qatar’s competitive edge as the world’s lowest-cost producer may squeeze out rival projects in locations such as the US and East Africa.
Following the onset of the conflict in Ukraine in 2022, competition between the US and Qatar in the global gas market has intensified. US gas suppliers filled the supply vacuum created by Europe’s decision to reduce dependence on Russia’s pipeline gas, establishing the US as the world’s largest LNG exporter in 2023 by surpassing Qatar and Australia. LNG capacity in the US is projected to nearly double over the next four years, however, US President Joe Biden’s January 2024 decision to pause approvals for new LNG export terminals to undertake environmental reviews could impact export volumes. This decision has caused some concern among gas importers and coincides with Qatar’s expansion plans.
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