Qatar plans LNG supply split

Qatar plans LNG supply split

By Raphael Minder in Bangkok

Published: March 16 2008 18:11 | Last updated: March 16 2008 18:11

Qatar, which has overtaken Indonesia as the leading exporter of liquified natural gas, is hoping to split its shipments equally among the US, Europe and Asia by 2010 to reduce its exposure to big price swings.

Gas executives from Qatar also reiterated that the country was on track to more than double production to 77m tonnes a year by 2010, in spite of recent concerns over project delays.

Production is set to be divided between two state-owned entities, with Qatargas supplying 42m tonnes and RasGas the remainder.

A significant part of the investments earmarked by Qatar involve building several LNG terminals in Europe and North America with ExxonMobil, which would allow it to gain more control over the gas supply chain.

Alaa Abu Jbara, marketing director for Qatargas, stressed the importance of Asian buyers who have recently been receiving diverted shipments from Qatar.

By achieving “an equally balanced” export portfolio, he said that “Qatar will be positioned to respond to any changes in the market”.

Qatar’s export strategy has become an industry benchmark because, as Fereidun Fesharaki, chairman of consultancy Facts Global Energy puts it: “Qatar holds most of the cards and they know it.”

Furthermore, Qatar’s geographic positioning allows it to choose between the gas buyers in the Atlantic and Pacific basins, given that shipment costs and times are comparable in both directions.

Hamed Al Marzouqi, LNG sales co-ordinator and head of research for Adgas, Abu Dhabi’s only LNG company, said Adgas had committed about 90 per cent of production to Japan and had no plans to re-enter an American market where prices remain much lower.

“The US price is also more volatile and gets much affected by what happens in alternative markets such as pipeline gas,” he said.

Separately, the president of China’s only operating LNG receiving terminalon Sunday scotched speculation that China could delay plans to build as many as 12 such terminals because of the high import price for LNG and a greater focus on developing domestic gas production.

While China recently signed long-term agreements to import gas from Australia, analysts have also questioned whether Beijing would stick to its original terminal construction.