Output capacity to jump with new projects
Published: 10/29/2006 12:00 AM (UAE)
By Stanley Carvalho, Staff Reporter
archive.gulfnews.com
Abu Dhabi: Mega projects in the Middle East will add a staggering 74 million tonnes to the region's liquefied natural gas (LNG) output capacity in the next five years with Qatar being the dominant producer, according to an official study.
LNG supplies by Qatar to the United States alone will peak to nearly 30 million tonnes and this could combine with supplies from other sources to depress gas prices, said the study by the Saudi Arabia-based Arab Petroleum Investment Corporation (Apicorp).
Apicorp is an affiliate of the Organisation of Arab Petroleum Exporting Countries (Oapec).
"The strong demand outlook has encouraged LNG expansion in Qatar, Oman and Egypt. New projects are expected in Yemen, Algeria and possibly Libya. The resulting additional capacity due to come on stream between 2007 and 2011 in the Arab world will be around 74 million tonnes, 69 per cent of which is in Qatar," said the study, obtained by Gulf News.
Momentum raised
It noted that Qatar, which controls the world's third largest natural gas resources, has accelerated the already strong momentum it has built, firmly positioning itself as a global LNG player.
It said ongoing multi-billion dollar projects at the country's massive North Field would nearly triple its LNG production from 25 million tonnes last year to nearly 77 million tonnes by 2011 to overtake Indonesia and become the top global LNG supplier.
Qatar has invested in excess of $60 billion in its LNG industry and has just approved more than $33 billion in its 2006-2011 development plan for gas projects as part of the $55-billion investment programme for crude oil, refining, petrochemicals and other projects.
"Large volumes of Qatari gas have been earmarked for the UK and the US markets, with the latter expected to take as much as 30 million tonnes, but how much can actually be taken in?" Apicorp said.
Concerns
Citing official US figures, it said the total US terminal capacity expected to be available by 2011 is significant enough to raise concerns about the likely impact of Qatar's LNG on gas prices.
"Economic theory suggests that in a competitive market, prices are set by the highest marginal cost supplier needed to meet scheduled demands. As noted earlier, LNG supply is infra-marginal and, therefore, does not set the prices," the study said.
"However, by displacing a large quantity of the costly US domestic unconventional gas supply, combined LNG supply from Qatar and other sources has the potential to exert a downward pressure on prices."
Key LNG producers in the Middle East
According to industry sources, Qatar's proven natural gas reserves are equivalent to more than 160 billion barrels of crude oil and could last well over 200 years at present output levels.
Other key LNG producers in the Middle East are Oman, which has just completed a project to raise its capacity by 50 per cent to more than nine million tonnes, and the UAE, which produces more than 8 million tonnes.
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