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Kaabi eyes greater share of LNG market as he lifts moratorium at North Field

Saad al-Kaabi, chief executive of Qatar Petroleum (QP), surprised the market this week by declaring an abrupt end to a self-imposed ban on the North Field that accounts for all of Qatar’s liquefied natural gas exports, domestic supplies and gas-to-liquids production.

In lifting the 12-year ban, Kaabi said extensive reservoir studies justify resumption of LNG developments as Qatar looks to grab a larger share of the global LNG market.

The decision also enhances Kaabi's reputation as a high-flying executive focused on maximising revenues for Qatar. Kaabi has stamped his mark on Qatar’s energy industry through cost cuts and squeezing margins on foreign companies' projects.

Since his appointment as QP chief executive in 2014, he has overseen the departure of Denmark's Maersk Oil from Qatar’s largest oilfield, al-Shaheen, handing over operatorship to France’s Total in a deal that gives Qatar a larger production share. Recently, he announced a merger of Qatargas and RasGas in a move triggered by the collapse of the oil market that has forced Qatar to resort to consolidation.

Analysts now believe Qatar may have calculated it is a good time to add new LNG capacity when global activity levels and costs are low. By the time the new project comes to fruition, the current oversupplied LNG market will have come into balance.

"It’s a signal that Qatar intends to increase its market share. But it is also a threat to other developers of new capacity worldwide, as Qatar can add new capacity at a lower cost than anybody else," says consultancy Wood Mackenzie.

The danger is that Qatar is putting its immediate financial needs before the long-term health of a field that has propelled it to the top tier of the wealthiest counties in the world.

The ban was imposed to limit the impact of rapid exploitation that risked causing drops in pressure and possible reservoir damage at the North Field.

Qataris will be hoping there is no danger that lifting the moratorium will harm the goose that laid the golden egg.