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Tim Daiss

Tim Daiss

I'm an oil markets analyst, journalist and author that has been working out of the Asia-Pacific region for 12 years. I’ve covered oil, energy markets…

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Can Any Country Dethrone Qatar As Top LNG Exporter?


By now it should be clear that Qatar has no intention of giving up its slot as the world’s top LNG player, both in terms of exports and liquefaction capacity. While Australia did pass the middle eastern gas producer briefly a few months ago, Qatar will ramp up its liquefaction capacity from 77 million tons per annum (mtpa) to 110 mtpa within five years, making it difficult for both Australia and the U.S. to catch up.

Now, Qatar is also talking up its LNG game in Asia, which represents 72 percent of global LNG demand, with that demand projected to increase to at least 75 percent amid increased usage of the super-cooled fuel from China. China’s historic increase in both piped natural gas and LNG comes as the country fulfills a government mandate that natural gas makes up at least 10 percent of its country’s energy mix by 2020 to offset record air pollution levels, particularly in its major urban centers. Further earmarks are in place to 2030 as well.

"Asia is the biggest market for LNG, or fuels in general because that is where [economies are growing], and that is where the need is," al-Kaabi said. "For us, the Asian market is a fundamental market and we have great relationships politically with all the Asian countries,” Qatar’s Energy Minister Saad Sherida al-Kaabi said in an interview with Nikkei Asian Review on Thursday. He also mentioned Japan, which is currently the world’s largest LNG importer, followed by China and South Korea.  "Japan, in particular, has a very special place in our heart, and we are looking to extend our contracts with Japanese companies," al-Kaabi said.

al-Kaabi said that in the aftermath of the Fukushima nuclear disaster, Qatar canceled LNG shipments to other destinations, diverting them instead to Japan and selling them at contract prices, despite gas prices being "very high" at the time, the report added. "We wanted to show the people of Japan our respect," he said.

However, what he failed to address was that much of that supply was still attached to restrictive long-term contracts that eventuality forced Japan to turn to India and others to try at the time to bring more control over contractual LNG deals. Japan also saw the formation of what is now the world’s largest buyer of LNG when Tokyo Electric Power and Chubu Electric Power formed JERA to have more buying power in LNG markets as well as integrating the value chain from upstream fuel investment and procurement through power generation

Related: Permian Production To Break 4 Million Bpd In March

Due to increased LNG usage in Asia, particularly Japan after Fukushima, spot LNG in Asia breached the $20 per million British thermal units (MMBtu) mark in February 2014. Since then, amid more supply coming from new projects in Australia and the U.S., markets have been in a multi-year supply overhang with a corresponding downward trajectory in prices.

In fact, LNG spot prices in Asia have hit a 17-month low, an unusual development for this time of year. Spot prices for March delivery to Asia LNG-AS fell to $6.50/MMBtu last week, down 20 cents from the previous week to their lowest since Sept. 8, 2017, trade sources said. Lower prices come amid tepid demand in North Asia and warmer than usual temperatures for this time of year.

Going forward, al-Kaabi said that by the end of 2019 Qatar will likely raise the bar again, developing natural gas fields in Africa and North America to maintain its top spot and keep up with Asian demand. Not only will more demand be coming from China, but also from Pakistan as that country develops its LNG import sector to offset record energy supply shortages that have caused persistent blackouts, the Philippines too as it tries to put in place its first working LNG import terminal before its main source of natural gas in its offshore natural gas field runs out in less than five years, from India, Bangladesh, Thailand and in time Vietnam.

By Tim Daiss for Oilprice.com


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  • Mamdouh Salameh on February 24 2019 said:
    It is an emphatic NO. No country in the world could dethrone Qatar as the world’s largest producer and exporter of LNG and the cheapest producer to boot.

    When Qatar decided to leave OPEC by January 1, 2019, many questioned its decision. Some even described it as an irrational decision. However, Qatar’s decision was overwhelmingly motivated by concentrating on LNG being the major source of its wealth and also taking measures to defend its position as the world’s largest LNG producer and exporter against Australia, the US and Russia.

    Not only is Qatar expanding its LNG production capacity from the current 77 million tons per annum (mtpa) to 110 mtpa, it is also buying the opposition and investing worldwide in LNG assets. It is working on the principle that it will never allow Australia, the United States and Russia to dethrone it from the top LNG spot. Qatar currently accounts for 32% of global LNG demand and 80% of all LNG exports to the Asia-Pacific region.

    Qatar is concentrating on the Asia-Pacific region because it accounts for 72% of global LNG demand, the region has the world’s two biggest importers of LNG, Japan and China and demand in this region is projected to increase by at least 75% amid increased usage from China. The fast-growing demand for natural gas in China for which domestic production is not sufficient and China’s decision for environmental reasons to implement the coal-to-gas policy have created the need for more gas and LNG supplies.

    In Asia, Qatar faces challenges from Australia and eventually the United States. Australia is investing heavily in expanding its LNG production and export capacities. However, Australia can never dethrone Qatar for the simple reason that Qatar has a fully integrated LNG industry meaning that it has the world’s third largest proven reserves of natural gas, it also has the plants that convert the gas into LNG, a fleet of LNG tankers and furthermore all its investments have been paid for long time ago. Of great importance though is the fact that the decision-maker is one authority, namely Qatar Petroleum whilst in Australia there are many decision-makers as LNG production and investments are carried out by many companies.

    The United States could never overtake Qatar. The reason is that future US LNG exports will face stiff competition from leading exporters of LNG in the world, namely Qatar, Australia and recently Russia.

    In a world of low energy prices, the cost of shipping LNG from the United States to Europe or Asia is prohibitively expensive. Countries such as Qatar, Algeria and Norway can export LNG to Europe at a much-reduced cost, pricing the United States out of the market. In Asia, Australia, Malaysia, Brunai and Indonesia export LNG at prices the United States can’t match, at least for spot exports and short-term contracts.

    In 2018 the US exported an estimated 14 million tons (mt) of LNG compared with 70 mt by Qatar and some 60 mt by Australia.

    Qatar has proven through its global investments and the fact that it enjoys the highest per capita income in the world that its vision and understanding of global economics and geopolitics is far superior to most countries of the world. Also the fact that it has maintained its ranking as the world’s largest producer and exporter of LNG speaks volumes of its sophisticated business acumen and strategic thinking.

    The Qatar Investment Authority (QIA) has been very astute in its choice of overseas investments. Qatar is enhancing its lead by buying the competition or investing in more LNG productive assets around the world. The proposed investment of $20 bn in LNG projects in the United States over the next few years falls within that investment strategy. Qatar already has a significant presence in the emerging LNG market of the United States. It is the majority stakeholder in the Golden Pass terminal in Texas, where it has partnered with ExxonMobil and ConocoPhillips.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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