Poised to sustain position as number one LNG exporter, lowest-cost producer
Qatar is the world’s largest LNG exporter, with 82 MMt in exports in 2017, placing it ahead of Australia, Malaysia and Nigeria. The United States will emerge as a competitor in terms of market share to Qatar in the coming years, having become a net exporter in 2016.
Qatar’s LNG production comes from seven LNG projects, each majority-owned by Qatar Petroleum (QP), a state-owned firm whose net liquefaction capacity exceeds that of any other company. To streamline its operations and LNG marketing, QP merged its Qatargas and RasGas joint ventures into a single entity under the Qatargas name at the start of 2018. Through these joint ventures, QP has long-term fixed destination deals with many of the world’s major LNG buyers. The single entity’s new marketing system will allow volumes to flow more freely between the Pacific and Atlantic basins, offering QP an edge against growing supply competition.
Qatar shows no signs of relinquishing its position in the global market. In 2017, QP lifted its moratorium on new gas production from the North Field that feeds its liquefaction plants and has since announced plans to build three new LNG megatrains. With these moves, QP is making a concerted effort to increase its LNG capacity so that Qatar can remain the global leader in LNG exports despite rapid export capacity expansion in Australia and the United States.
Thanks to its low upstream costs supported by associated liquids revenue, Qatar has earned a reputation as the lowest-cost producer of LNG. Maintaining this status would not only enable Qatar to continue its LNG expansion, it would also allow it to displace potential rivals. QP is well-placed to crowd out other potential new liquefaction capacity around the world—even in the US—due to Qatar’s superior economics. This could force competitors seeking to bring new projects online during the planned Qatargas expansion to delay startup, given their likely inability to compete with Qatar’s attractive LNG exports price when seeking buyers.