Qatar’s bet on Asian demand

Lea Hogg February 26, 2024

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Qatar’s bet on Asian demand

Qatar, a leading global supplier of liquefied natural gas (LNG), is making a strategic bet on the future of energy. The Gulf state plans to increase its LNG production capacity by nearly 85 percent before the end of the decade, a move that underscores its confidence in surging demand from Asia, particularly China.

This ambitious plan comes in the wake of the discovery of vast new gas reserves and is a clear indication of Qatar’s commitment to maintaining its position as a key player in the global energy market. The increase in production capacity is expected to take Qatar’s gas industry to new horizons, according to the country’s energy minister, Saad Sherida Al-Kaabi. The decision to boost LNG production is a calculated gamble. It’s based on the expectation that Asian economies will continue to switch from coal to cleaner energy sources as part of their efforts to reduce carbon dioxide emissions. This shift in energy consumption presents a significant opportunity for LNG producers like Qatar. Currently, Qatar has the capacity to produce about 77 million tonnes per annum (mtpa) of LNG.

Strategic increase in LNG export capacity

However, plans announced in recent years aim to expand this to 126 mtpa by 2027. State-owned QatarEnergy has further plans to add an additional 16 mtpa before the end of the decade, taking the total capacity to 142 mtpa. This expansion is not without its challenges. As Qatar increases its gas reserves and production capacity, it must also navigate the geopolitical complexities of the global energy market.

The demand for LNG spiked following Russia’s invasion of Ukraine in 2022, as Europe sought to replace lost Russian pipeline volumes. While some regions, like Europe and the UK, are trying to reduce their reliance on natural gas to lower carbon dioxide emissions, others see it as a lower-carbon alternative to coal. A recent report by oil and gas supermajor Shell forecasts that global demand for LNG will climb by more than 50 percent to reach between 625 million and 685 million tonnes by 2040. Qatar’s bet seems to be paying off already. Over the past 15 months, the country has secured two significant gas supply deals with China. In June, it agreed to sell 4 million tonnes a year of LNG to China National Petroleum Corporation for 27 years, following a similar deal with China’s Sinopec in November 2022. In conclusion, Qatar’s decision to increase its LNG export capacity is a strategic bet on the future of energy. By focusing on the anticipated demand from Asian markets, Qatar is positioning itself to remain a dominant player in the global LNG market for years to come.

————-Stop Press: the next SiGMA Eurasia Summit takes place in Dubai between 25 – 27 February. The next SiGMA Africa Summit takes place in Cape Town between 11-13 March ! The fourth edition of SiGMA Eurasia will once again be held at the InterContinental Dubai Festival City. Held between the 25 and 27 February 2024, the summit provides invaluable networking opportunities for industry professionals, gain exposure to the latest tech and innovations in the sector, meet key decision makers, and gain insight into new markets. SiGMA Africa event kicks off in Cape Town, South Africa on the 11 March. Building on the success of its inaugural edition in Nairobi, Kenya, in January 2023, SiGMA Group recognizes the need to foster collaboration and innovation within the industry.