Qatar has reaped benefits from changes in the global energy market caused by the conflict in Ukraine, and the accelerated energy transitions of several countries. The country has signed major long-term energy supply deals with China, France, Germany and the Netherlands, and will likely renew gas agreements with South Korea in the near future. The North Field expansion project, which will increase liquefied natural gas (LNG) production capacity in the country by nearly 85% by 2030, is set to deliver its first gas in 2025 and be completed in 2027. This will solidify the position of the national energy company, QatarEnergy (QE) as the world’s largest LNG producer and the international LNG market’s most powerful actor. In 2022 Qatar’s first solar power project came online, supplying the country with 7.5% of its electricity needs, with two more solar projects scheduled for completion in 2025. These will bring Qatar closer to its target of 20% renewable energy by 2030 and form the foundation of its national sustainability initiative.
Structure & Oversight
QE, known as Qatar Petroleum prior to October 2021, is the country’s main supplier of energy. Saad Sherida Al Kaabi was appointed as the company’s CEO in 2014 and also serves as Qatar’s minister of state for energy affairs. The deputy Amir, Sheikh Abdullah bin Hamad bin Khalifa Al Thani, is QE’s chairman. QE operates in the LNG market through its wholly owned subsidiary, QatarEnergy LNG, formerly known as Qatargas. Other important companies in the natural gas and LNG sectors include Oryx GTL, a joint venture between QE and South Africa-headquartered energy and chemicals company Sasol; Pearl GTL, a plant operated by oil major Shell in a joint venture with QE; and Dolphin Energy, a joint venture between Abu Dhabi’s sovereign wealth fund, Mubadala Investment Company, France’s TotalEnergies and the US’ Occidental Petroleum. Dolphin Energy operates the Dolphin Gas project that transports gas from Qatar to both the UAE and Oman.
Qatar General Electricity and Water Corporation, also known as Kahramaa, is the national water and electricity transmission and distribution company, managing 3640 km of electricity transmission cables and a 1440-km water network. Electricity production and water supply were outsourced to private actors in 2002, while Kahramaa remains responsible for formulating power and water purchase agreements with these entities, in addition to managing Qatar’s utilities infrastructure. Kahramaa also regulates the country’s independent power producers (IPPs) and independent water and power producers (IWPPs). The core laws for the utilities sector include Amiri Decree No. 35 of 2014, which lays out Kahramaa’s mandate; Law No. 2 of 2021, which governs electricity and water tariffs; and Council of Ministers Resolution No. 7 of 2004, which established the Permanent Water Resources Committee (PWRC). The PWRC has seven members, including the chairman of Kahramaa and the minister of state for energy affairs. It lays out the country’s long-term blueprint for water and water security.
IPPs & IWPPs
Qatar’s largest energy-producing and water company is Qatar Electricity and Water Company (QEWC), the largest shareholders in which are the national sovereign wealth fund Qatar Investment Authority (30.5%), the General Retirement and Social Insurance Authority (14.2%), and QE (10.7%). QEWC holds a 62% share in the electricity market and a 79% share in the water market. It is a shareholder in several power companies, with a 55% stake in Qatar Power (also known as Q Power), which runs the Ras Laffan B gas-fired power plant; 40% in Ras Girtas Power Company, the operator of Ras Laffan C and Qatar’s largest IWPP; 60% in Umm Al Houl Power Company, which operates Qatar’s second-largest IWPP; and 40% in Mesaieed Power Company, which runs Mesaieed power station, the country’s third-largest gas-fired IPP. Other QEWC subsidiaries include the Ras Laffan Power Company and international utilities investor Nebras Power. QEWC held 49% in renewables company Siraj Energy until late 2022, when its stake was bought by QE. According to Kahramaa, the total contracted capacity for IPPs was 10.6 GW in 2022.
Most of the IPPs also have water production operations. QEWC has five wholly owned subsidiaries that supply 1.7m cu metres of desalinated water per day, out of the country’s total capacity of 2.4m cu metres. Ras Laffan Power Company, Q Power and Ras Girtas Power Company had a combined supply of 740,000 cu metres per day, and Umm Al Houl Power had a capacity of 900,000 cu metres, at the end of 2022.
Sustainability
QE launched its sustainability strategy in January 2021, informed by Qatar National Vision 2030, the UN Sustainable Development Goals and the Paris Agreement signed at the COP21 UN Conference on Climate Change. The balance the strategy must strike is reducing emissions without jeopardising the company’s competitiveness in the LNG market. QE’s updated sustainability targets in 2022 included attaining a methane intensity of 0.2% by 2025, increasing carbon capture and storage (CCS) capacity to more than 11m tonnes per annum (tpa) by 2035, achieving zero routine flaring by 2030, and reducing CO₂ emissions from upstream and LNG facilities by 25% and 35%, respectively. QE will expand its solar energy-generation capacity to 5 GW by 2035.
In September 2021 the Ministry of Environment and Climate Change was established by Amiri Decision No. 57, and the Council of Ministers approved the National Climate Change Plan. The plan contains initiatives to reduce emissions and tackle the growing effects of global warming on the country. For example, the Msheireb Downtown Doha project is a pilot for more sustainable urban planning and will test new technologies to reduce water consumption and the large-scale implementation of residential solar photovoltaic (PV) panels. Other steps include a district cooling system in Lusail City, improving public transport options, increasing agricultural productivity and improving waste management.
On the renewable energy front, Qatar aims for solar energy to constitute 30% of its electricity-generation capacity by 2030. In October 2022 the country’s first solar-PV energy project, the 800-MW Al Kharsaah power plant, started operating and now supplies around 10% of domestic peak energy consumption needs. According to QE, two more projects with a combined planned capacity of 880 MW will be finalised through to 2025. To reduce energy consumption, Qatar has expanded the scope of its National Programme for Conservation and Energy Efficiency (Tarsheed), launched in 2012 by Kahramaa. The programme aims to reduce water and energy consumption through public education programmes, and in December 2023 the president of Kahramaa said the next steps taken will be increasing electric vehicle uptake in Qatar and implementing stricter regulations concerning water and energy usage. Kahramaa wrote in its 2022 annual report that the installation of smart meters for water and electricity, and better data collection on both the supply and demand ends of electricity and water infrastructure, were key projects in tackling growing demands from consumers. In the Third National Development Strategy 2024-30 (NDS-3), a 33% reduction target in household water usage was set.
The uptake of renewables is partially limited by the very low domestic cost of energy generated from fossil fuels, a result of the world’s highest energy subsidies per capita. ClimateScope, a market assessment tool from Bloomberg, found that the average electricity price in Qatar in 2022 was only $40.26 per MWh, compared to $175.18 in Norway, $120.01 in the US and $59.51 in Saudi Arabia. A 2022 analysis by the Qatar Environment and Energy Research Institute found that without major subsidies and a carbon tax, solar energy would be uncompetitive in Qatar at current prices.
Qatar’s Ministry of Environment and Climate Change states that its priorities are protecting the environment, preserving its resources and reducing the emissions that cause climate change. The ministry is headed by Abdulla bin Abdulaziz bin Turki Al Subaie, who was appointed following a cabinet reshuffle in January 2024. In addition to overseeing environmental tourism projects, the ministry funds universities and research projects that evaluate how the country can tackle climate change-induced challenges such as rising sea levels, groundwater sustainability, and heat-resistant crop development.
Size & Performance
According to the Energy Institute’s “Statistical Review of World Energy 2023”, Qatar produced nearly 1.8m barrels per day (bpd) of crude oil in 2022, equivalent to 1.9% of global production, continuing a slightly downwards trend since reaching peak production at 1.9m bpd in 2013. Natural gas production has been trending upwards during the same period, from 167.9bn cu metres per year in 2013 to 178.4bn cu metres in 2022, making up 4.4% of total global production and placing Qatar sixth behind the US (978.6bn cu metres), Russia (618.4bn cu metres), Iran (259.4bn cu metres), China (221.8bn cu metres) and Canada (185bn cu metres). At the end of 2020 Qatar had 13.1% of the world’s proven natural gas reserves. Natural gas production in the country saw an average annual growth rate of 19.8% from 2003-12. However, from 2012-22 annual average growth was 0.9% due to lack of new project investment. A substantial increase in production is expected once the North Field expansion project comes online.
In 2022 QE posted revenue of QR196.1bn ($53.8bn) and QR154.6bn ($42.4bn) in net profit, up from QR127.3bn ($35bn) in revenue and QR97.9bn ($26.9bn) in net profit in 2021. In February 2023 QE expanded its regional footprint by buying a 30% stake in a consortium with Italian oil major Eni and TotalEnergies to undertake oil and gas exploration in Lebanon’s territorial waters, marking QE’s first activity in the country. Additionally, QE bought a 25% stake, valued at $2.5bn, in a gas project in southern Iraq in April 2023.
LNG Exports
In 2022 Qatar overtook Australia to become the world’s largest LNG exporter. According to the “Statistical Review of World Energy 2023”, Qatar exported 114.1bn cu metres of LNG in 2022, giving it a 21% export share worldwide, slightly ahead of Australia’s 112.3bn cu metres of exports and its 20.7% market share. The US exported 104.3bn cu metres of LNG in 2022, or 19.2% of global exports. Over the last decade Qatar has reduced its role in the LNG spotsales market, where it had around 25% market share in 2012, to less than 6% in 2021, opting instead for long-term contracts indexed to oil prices. In contrast, the US favours smaller contracts based on spot prices.
Qatar’s LNG is consumed primarily by Asia, with Europe its second-largest market. The latter market is expected to continue to grow due to changing geopolitical priorities as countries seek sustainable alternatives to Russian gas in the wake of the conflict in Ukraine. In November 2022 Qatar and Germany inked a 15-year, 2m-tpa LNG export deal that will begin in 2026 and supply Germany with the equivalent of 30 TWh, or approximately 3% of the European country’s annual energy consumption. In October 2023 QE also signed two 27-year, 3.5m-tpa deals with both TotalEnergies and Shell, making them the longest-ever LNG export deals Qatar has made with Europe. Each of the agreements starts in 2026. Another notable aspect of these contracts is that they will not likely be indexed to oil prices. According to ratings agency Standard & Poor’s, the gas will instead be priced according to the Dutch Title Transfer Facility, which became Europe’s largest gas trading hub in 2016.
In Asia, Qatar’s largest liquefied petroleum gas export markets in 2022 were India ($12.6bn), China ($12.3bn), South Korea ($7.4bn), Pakistan ($3.4bn), Taiwan ($2.9bn) and Japan ($2.8bn), according to the Observatory of Economic Complexity, an online data platform. In 2021 South Korea and Qatar signed a 20-year contract that will see state-run Korea Gas (KOGAS) purchase 2m tpa of LNG from QE starting in 2025. KOGAS has a 4.9m-tpa contract that is set to expire in 2024 and previously, through long-term contracts, bought 9m tpa from QE. Qatar also has several major deals with China. Among these, in March 2021 QE and China’s state-owned Sinopec signed a 20-year, 2m-tpa deal, followed by a 27-year, 4m-tpa in November 2022 and a 27-year, 3m-tpa deal in November 2023. In June 2023 China National Petroleum Corporation (CNPC) and QE also signed a 27-year, 4m-tpa deal. As part of these deals, Sinopec and CNPC have each acquired 5% stakes in the equivalent of one LNG train in the North Field expansion project.
Medium-Term Outlook
Qatar has been a beneficiary of the conflict in Ukraine, as seen by the longterm LNG deals signed with European countries. Increased demand as the continent seeks alternatives to Russian gas is also a driver for Chinese contracts, as the country wants to guarantee supply as the world transitions from fossil fuels to renewables, with LNG a vital tool to achieve the transition. LNG demand is expected to grow through the 2030s and stay elevated in the 2040s, with Qatar positioning itself to replace Russia and compete with the US to be Europe’s primary source of gas. In the medium term, European reliance on Qatar’s gas will likely increase as environmental regulations and net-zero targets limit the upstream investment of regional players such as Norway’s Equinor and Eni. Indeed, in May 2023 at the Qatar Economic Forum, Al Kaabi noted that Europe’s aggressive energy transition may lead to gas shortages due to inadequate funding for new projects, and that increasing LNG demand will likely result in Qatar being unable to make up the shortfall.
North Field Expansion Project
To draw maximum benefit from increased LNG consumption and to maintain competitiveness with the US and Australia, Qatar is set to expand its LNG production capacity from 77m tpa in 2023 to 110m tpa in 2026 and 126m tpa in 2027. The North Field expansion project has two stages: the North Field East (NFE) expansion, to be completed in 2026, and the North Field South (NFS) expansion, to be completed the following year. In February 2024 QE announced further development plans with the North Field West expansion, which will increase Qatar’s LNG production capacity by nearly 85% to reach 142m tpa by end-2030.
Additional project developers besides QE, which will be a 75% shareholder, include the US multinational energy companies, ConocoPhillips and ExxonMobil, as well as TotalEnergies, Eni and Sinopec, which have stakes in the NFE expansion, and Shell, a partner in the NFS expansion project. The total cost of the project is estimated to be $50bn, making it the most expensive LNG project to date. Its vast scale means that, despite Qatar’s preference for long-term contracts, excess capacity will likely result in it becoming an important player in the spot market once again. Qatar is investing in building a highly diversified group of clients, both to limit the impact of an economic downturn in various countries or regions and to strengthen its energy diplomacy. This diplomacy is based on the country being a reliable source of gas while also showing flexibility for its clients. One example of this approach is agreeing with requests from Asian countries to delay LNG shipments due to reduced economic activity as a result of the Covid-19 pandemic.
The North Field expansion has also led to major shipbuilding contracts, with 60 LNG carriers being contracted to Chinese and South Korean shipyards. South Korea’s HD Hyundai Heavy Industries and Samsung Heavy Industries won a $3.9bn, 17-ship contract and a $3.4bn, 15-ship deal with QE, respectively. Qatar has also contracted Chinese shipbuilding company CSSC Hudong Zhonghua for a $2.4bn, eight-ship project. By the time these contracts are completed, Nakilat, Qatar’s LNG transport company, will have the largest fleet of LNG carriers in the world.
The LNG expansion project has environmental implications as well. It will be connected to one of the largest CCS facilities in the world as well as Qatar’s three solar-PV power projects, expected to reduce emissions by 1m tpa of CO₂ equivalent. The project aims to recycle 75% of its industrial wastewater, saving 10.7m cu metres of water per year. Lastly, the project will produce 6500 tonnes of ethane gas per day, to be used as feedstock by the petrochemicals industry.
Infrastructure
Qatar’s energy infrastructure is primarily concentrated in Ras Laffan Industrial City to the north, and the Mesaieed Industrial City to the south of Doha, which house most of the country’s desalination and energy production facilities. Among the notable energy infrastructure projects is the GCC Electrical Interconnection Project, which commenced in 2005, began operations in 2009 and reached completion in 2014. The six GCC countries are connected to a joint electricity network, enabling them to minimise domestic reserve capacity and depend on the international grid during peak demand. The transmission line connecting Qatar to the GCC network has a capacity of 750 MW. Efforts are under way to expand the project into Iraq and Jordan, with the Iraqi branch scheduled for completion in late 2024.
Qatar is also developing its domestic infrastructure. Ooredoo, Qatar’s largest telecoms provider, and Swedish multinational Ericsson are installing communications technology to improve ship-to-shore communication for incoming LNG tankers.
In 2024 Kahramaa and the Public Works Authority (Ashghal) are expected to release tenders worth an estimated combined $19.2bn to develop Qatar’s infrastructure. The majority of Kahramaa’s tenders will focus on electricity infrastructure, with 83 of these totalling $1.8bn, followed by 41 tenders for water infrastructure totalling $604m, as well as service department tenders worth $263m.
Electricity & Renewables
The International Renewable Energy Agency stated that Qatar’s total domestic energy supply in 2020 consisted of 91% gas and 9% oil, with only 0.02% of the country’s energy produced from renewable sources. However, this figure does not include the 800-MW Al Kharsaah solar-PV plant, which accounts for around 7.5% of the country’s electricity-generating capacity and 10% of its peak consumption needs. Two additional projects with a combined output of 880 MW will be built in Mesaieed Industrial City and Ras Laffan Industrial City. If these solar energy projects come online as expected, about 13% of Qatar’s electricity generation capacity will come from solar energy by the end of 2024, with solar capacity totalling 1780 MW out of a total generating capacity of 12 GW. Qatar aims to have more than 4000 MW of solar-generation capacity and produce 20% of its electricity from renewable energy by 2030.
Feasibility studies are under way for a large-scale wind farm in the north due to the country’s wind power potential. However, the low cost of solar energy combined with the fact that the wind blows hardest during winter months, when it is least needed, means that wind energy is unlikely to play an important role in Qatar’s renewable energy portfolio.
Qatari electricity consumption saw an average annual growth of 10% from 2000-19, primarily driven by the rapid increase in air conditioning usage and water desalination demand. As of 2022 the residential sector made up 47% of that consumption, followed by services at 29% and industry at 24%. A 2022 academic analysis found that a 1°C temperature increase in Qatar could lead to a potential 10% increase in energy consumption, putting a premium on policies that improve efficiency and address climate change challenges, such as the Tarsheed initiative to raise public awareness on reducing energy consumption.
Looking ahead, Qatar is investing in CCS technology, with a stated goal of capturing 11m tpa of CO₂ by 2035 and 5m tpa by 2025. The Ras Laffan CCS project is the largest of its kind in the world, with a stated capacity of 2.1m tpa. QE reports that it captured 5m tpa of CO₂ from 2019-22. CCS will also be used to create blue ammonia, whereby ammonia is created from the hydrogen from natural gas while the remaining CO₂ is sequestered using CCS technology. QatarEnergy Renewable Solutions and Qatar Fertiliser Company have announced plans to open the world’s largest blue ammonia plant in 2026, situated in the Mesaieed Industrial City with a capacity of 1.2m tpa.
Water
According to Qatar’s Planning and Statistics Authority (PSA), in 2021 Qatar obtained 61% of its water supply from desalination, 23% from groundwater abstraction and 16% from treated sewage effluent. Total desalination production in 2021 was 671m cu metres. The PSA estimates that groundwater usage is five times higher than a sustainable level, primarily driven by agricultural use – which has led to the depletion of aquifers and increased salinity. Only 13% of water added to aquifers is from rainfall; the remaining 87% comes from irrigation water and artificial recharge. As a result, Qatar’s current water usage patterns are unsustainable. Agriculture accounted for more than one-third of Qatar’s water in 2021 (311m cu metres), followed by households (293m cu metres) and government usage (181m cu metres).
The energy-intensive nature of desalination makes it a prime target to reduce Qatar’s carbon footprint. Reverse osmosis is substantially less energy intensive than multi-stage flash distillation. Qatar’s largest desalination plant, Umm Al Houl, uses reverse osmosis and the technique desalinates about one-half of the country’s water. Increasing the use of reverse osmosis will be central to Qatar’s sustainability progress.
Outlook
Qatar is well situated to reap the rewards of ongoing geopolitical trends and the global energy transition. The ongoing conflict in Ukraine and resulting decreased demand for Russian energy products from Western markets has created major, long-term customers for Qatar’s LNG in Europe, and generated renewed interest in the long-term LNG agreements that are QE’s staple. Qatar’s vast production capacity, integrated transport infrastructure and reputation as a reliable partner mean that it can withstand increased competition from Australia and the US. Qatar must make contingency plans for uncontracted LNG capacity, but with global demand set to grow significantly over the coming decades and upstream investment limited by environmental regulations, it is unlikely that this will add uncertainty to Qatar’s economic outlook. However, as highlighted in the NDS-3, growth in the non-hydrocarbons economy is lower than in hydrocarbons. Nonetheless, the country has the opportunity to invest in clean energy solutions and generate longterm financial and environmental returns.
To this end, Qatar has announced ambitions to become a global centre for CCS technology. The investment made in the Ras Laffan power plant, integration of CCS into the North Field expansion project and Qatar’s blue ammonia production initiatives mean that CCS development will benefit from an integrated and well-funded technology ecosystem. In addition to increasing generation capacity in renewable energy and efficiency gains in desalination, efforts to reduce domestic energy consumption will be at the core of the country’s long-term energy sustainability drive.
