Qatar Halts Natural Gas Expansion Plans
The largest
source of liquid natural gas (LNG), Qatar has suddenly deferred plans of
expansion and choosing a western partner. Qatar is the world’s lowest-cost
producer of LNG sits on the world’s largest gas field had plans to expand
its production by 60 percent to 126 million tonnes a year by 2027 instead of
the original plan for a 40%.
The change
in expansion plans comes in the wake of a volatile and unsettled world economy
where most western (would-be) partners are troubled to find their foothold.
Also, the next big supplier of LNG has supplied in abundance and the biggest
buyer, China, isn’t buying right now. While Qatar has a very low-cost base, it still
needs capital to make an investment work and the product to be sold for it to
make any money at all.
According
to the state-owned Qatar Petroleum (QP), if need be, Qatar has plans to build
its own infrastructure independently.
This small Arab country has a wealth base in excess of $320 billion.
However, it would have preferred western partners that could share risks and
costs as well as give access to new customers.
The US is
already working on increasing its LNG exports as it has supplied in excess of its
own domestic demand. This will also impact the selling power for Qatar in the
near future. Global LNG prices are known
to have dived to an all-time low in Asia in January 2020 as China reduced
energy consumption because of the spread of coronavirus. Lower demand from
China undermined hopes that the biggest user of the fuel would soak up excess
supply to reduce its dependence on coal.
If QP undertakes its own expansion plans ahead, it will need as much as $60billion to put down the needed infrastructure. This would mean the construction of six more LNG trains and production of offshore production facilities at the cost of $10 billion per train.
Comments
Post a Comment