Recent years have seen a noticeable pivot towards bolstering Qatar’s gas production and liquid natural gas (LNG) export capabilities.
Qatar’s LNG exports, which brought in $132 billion last year, have supported the growth of the private sector.
Read more: Qatar to supply Germany with LNG in a 15-year deal
Although Qatar’s economy was powered by the construction boom leading up to the 2022 FIFA World Cup, the income generated by the expansion of the country’s LNG production and export capacity is expected to drive the economy for many years to come, despite the market turmoil caused by the fallout from Russia’s invasion of Ukraine in 2022.
Competition and decarbonization
Qatar, as one of the world’s largest exporters of liquefied natural gas (LNG), is currently facing several challenges in this sector. One of the main challenges is increased competition from other LNG producers, which has led to a decrease in prices and a tighter market.
Another challenge is the growing global focus on reducing carbon emissions and transitioning to cleaner energy sources. This has led to greater investment in renewable energy and decreased demand for fossil fuels, including LNG. Qatar has responded to this challenge by investing in new technologies and exploring ways to reduce the carbon footprint of its LNG production.
Despite longer-term questions over the role of gas in the energy transition, Qatar is betting that it can outcompete other prospective suppliers through scale, low production costs, the ability to renegotiate legacy contracts, deep relationships with established buyers, ownership of a fully integrated LNG supply chain, and co-production of condensates and liquefied petroleum gas. Qatar remains committed to forging ahead with expansion, and the final investment decision to proceed with the North Field East expansion was made in February 2021. Phase one of the expansion project is expected to increase capacity by 43% from 77 million tons per annum (mtpa) to 110 mtpa by 2025, with phase two further increasing production capacity from 110 mtpa to 126 mtpa by 2027.
Uncontracted LNG challenge
Qatar’s expansion plans and the expiration of legacy contracts (primarily in Northeast Asia) will result in over 60% of its export portfolio being uncontracted by the end of the decade. Following the outbreak of the conflict in Ukraine, Qatar has been actively promoting itself to secure long-term supply contracts, targeting both new European buyers and existing Asian partners.
Green LNG vision
Qatar has placed a long-term bet on LNG as a “green” transitional fuel and aims to be a leading supplier while supporting the global march towards carbon neutrality. To address the challenge of providing energy while reducing emissions, Qatar has been working since 2012 to reduce gas flaring and has launched an ambitious climate change action plan – the Qatar National Environment and Climate Change Strategy – which targets a 25% reduction in the carbon intensity of its LNG plants and upstream operations by 2030.
As part of the North Field expansion, a carbon capture and storage (CCS) facility will reportedly be included in a CO2 capture and storage cluster in Ras Laffan. Qatar is scaling up its energy transition investments to safeguard demand and support the country’s sustainability in the face of the global net-zero emissions goal. These investments signify a willingness to take commercial risks and support the energy transition.
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