Qatar’s LNG strategy to compete with Australia for dominance

As more countries start to import LNG to offset over-reliance on dirtier burning fossil fuels, including coal and even crude oil, much is at stake for both producers and buyers. For Qatar, until recently unaccustomed to challenges to its top LNG spot, the stakes could be the highest of all players involved.

The tiny, gas-rich kingdom has already left OPEC under geopolitical pressure and is now planning to increase its already impressive 77 million tonnes per annum (mtpa) liquefaction capacity to 110 mtpa within five years. For the Qataris, not only is national pride on the line as it seeks to fend off Australia’s recent attempts to usurp it from top global LNG producer, but its very survival geopolitically and economically is at stake too.

Qatar finds itself in an unenviable position, mostly ostracized by its Arab neighbors over allegations of terrorism funding, suffering a boycott instigated in 2017 by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt. Qatar has little choice but to defend its LNG production and exporting prowess, as well as diversifying and investing in rival LNG producers’ LNG sectors, including the U.S.

Australia, though admittedly dependent on energy exports, mostly LNG and coal, is not as vulnerable as Qatar, while the U.S., which could compete with both Qatar and Australia in terms of liquefaction capacity by the mid to last part of the next decade if more projects are pushed through, has the most diversified economy in the world, including currently being the top crude oil producer.

Amid all of these developments, Qatar is now courting foreign countries to invest in its gas sector. A Reuters report, citing industry sources, said that Qatar is preparing to issue a tender for energy firms seeking a stake in its gas expansion project, drawing interest from long-standing partners as well as newcomers Chevron, Norway’s Equinor and Italy’s Eni.

Plans to expand Qatar’s LNG facilities, already the largest in the world, by more than a third in the next five years are considered one of the most lucrative investments in the rapidly growing global gas market, the report added.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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