OPINION: Buoyed by sustained high gas prices and increased interest from European and Asian consumers, Qatar — one of the world’s leading liquefied natural gas producers — is considering plans to further boost the production capacity of its giant North Field.
While no official announcement has yet been made by QatarEnergy on expanding beyond 126 million tonnes per annum, Upstream understands it is already preparing for the ramp-up, with the scope of adding two more LNG trains to its North Field South project.
A few months ago, Qatari gas was out of bounds for European nations, owing to its higher costs and capital expenditure involved with regasification facilities.
However, as Europe moves to shun Russian gas imports and eyes alternatives to boost its energy security, Middle East producers such as Qatar and the United Arab Emirates are quietly working on boosting their LNG capabilities.
And while Qatar is eyeing its North Field expansion, the UAE recently highlighted its intention to proceed with the front-end engineering and design phase of the Fujairah LNG terminal.
Industry watchers believe there could be no better time for Qatar to aim for a higher LNG capacity, even though it could take years to achieve the goal.
Spot LNG prices zoomed past record levels in Asia in recent months, trading at more than $30 per million British thermal units on some occasions and forcing key gas-consuming nations to consider long-term supply arrangements with producers such as Qatar, Australia and the US.
While higher LNG prices could dent global demand in the long term, Qatar’s position between Asia and Europe also places it as a preferred partner for LNG exports.
Considering the favourable market prospects and the altered geopolitics that have opened up the European gas market, it won’t be too surprising if Qatar decides to progress on the further expansion of its North Field unilaterally, even beyond the announced capacity.
(This is an Upstream opinion article.)