Oxford Institute for Energy Studies | Center on Global Energy Policy | Columbia SIPA / by Bassam Fattouh, Howard V. Rogers, and Peter Stewart
…The US Shale Gas Revolution and its Impact on Qatar’s Position in Gas Markets is a collaborative study between CGEP, Columbia and the Oxford Institute for Energy Studies that examines how Qatar may be impacted by major changes to the global LNG market.
The expansion of Qatar’s LNG industry in the latter half of the 2010s, unprecedented in its scale and pace, established the country as the world’s largest LNG supplier. Such a move was made possible due to a sound business strategy of diversified sales and the disciplined execution of multiple projects. In addition to supporting its LNG business, Qatar’s offshore North Field also underpinned the rapid growth of a domestic industrial sector and limited regional pipeline exports.
LNG is a dynamic sector however and Qatar has many new challenges to address, including the rise of competing new supplies from Australia, the US, East Africa, Canada and Russia, uncertainty about the pace of Asian LNG demand and a desire on the part of LNG importers to move away from oil-indexation as the price formation mechanism for long term LNG contracts. With its moratorium on new LNG projects expected to remain in place for the medium term at least, Qatar will seek to adapt its sales portfolio strategy in order to optimise its revenues in a more competitive market.
This said, Qatar has a number of comparative advantages. Its geographic location enables it to access Asian and European markets without undue transport cost penalties, co-production of condensate and NGLs from the North field adds significant robustness to the economics of existing and future new projects and its remaining undeveloped reserves available for LNG notably exceed those of its competitors. In addition Qatar’s proven track record on project implementation and its low cost location would also allow it to deter competition, should it announce an intention to resume an expansion of capacity.
Although the recent falls in oil and regional gas prices will impact Qatar’s hydrocarbon revenues, the country has the financial resilience to weather these storms and to remain a powerful force in the LNG business for the foreseeable future.