• 3 minutes Nucelar Deal Is Dead? Iran Distances Itself Further From ND, Alarming Russia And France
  • 5 minutes Don Jr. Tweets name Ukraine Whistleblower, Eric Ciaramella. Worked for CIA during Obama Administration, Hold over to Trump National Security Counsel under Gen McCallister, more . . . .
  • 9 minutes Shale pioneer Chesepeak will file bankruptcy soon. FINALLY ! The consolidation begins
  • 12 minutes China's Blueprint For Global Power
  • 10 hours EU has already lost the Trump vs. EU Trade War
  • 2 days Science: Only correct if it fits the popular narrative
  • 3 hours Impeachment S**te
  • 2 days Crazy Stories From Round The World
  • 13 hours Pope Proposes New Sin: Thou Shalt Not Destroy The Harmony Of The Environment
  • 18 hours Everything You Need To Know About Trump
  • 10 hours 55.00 WTI
  • 12 hours Water, Trump, and Israel’s National Security
  • 1 day IEA predicts oil demand will grow annually at 1 million barrels a day for the next 5 years
  • 2 days Iran Burning: Shock Gas Price Hike Triggers Violent Protests After Subsidy Cuts
  • 10 hours Visualizing Pennsylvania Oil & Gas Production (Through September 2019)
  • 2 hours Article: Did Exxon only make $39 Million onshore U.S. last quarter ?
  • 2 days Atty General Barr likely subpeona so called whistleblower and "leaker" Eric Ciaramella
  • 2 days ‘If it saves a life’: Power cut to 1.5 million Californians
  • 18 hours Last I Checked
Alt Text

Top U.S. Gas Producer Looks To Ditch Major Shale Assets

Shale icon Chesapeake is reportedly…

Alt Text

The Birth Of An LNG Superpower

Iran’s rapprochement with Qatar and…

Rystad Energy

Rystad Energy

Rystad Energy is an independent oil and gas consulting services and business intelligence data firm offering global databases, strategy consulting and research products. Rystad Energy’s…

More Info

Premium Content

Qatar Is Poised To Win Race For New LNG Projects

In April 2017, Qatar lifted the North Field natural gas production moratorium that had been in place since 2005. This will allow Qatargas to increase production from the world’s largest gas field and export more LNG volumes. The company has plans to build three new liquefaction trains with a total capacity of 23.4 Mt. This would lift the country’s total export capacity to 100 Mt (+30 percent).

The expansion comes at a time when there are several liquefaction trains in the U.S. ready to take FID. The Qatari project represents a challenge for these projects as it is estimated that it has the lowest breakeven price of all the planned projects in the world. Rystad Energy estimates that the breakeven price for the Qatari brownfield expansion would be around $5.60 per MMBtu (including transport to Asia), which is around 34% below the breakeven price of the more competitive U.S. projects (see Figure 1).

(Click to enlarge)

Breakeven prices for the U.S. projects are estimated to be between $7.50 and $9.10 per MMBtu (including transport to Asia). The main reasons for the Qatari project being more competitive are that natural gas production costs are below other regions (see Figure 2), and its proximity to the Asian markets.

Qatargas signed a front-end engineering design (FEED) contract earlier this year sending a clear signal that they will go ahead with the development of the new trains. They have not yet disclosed the signing of long-term supply agreements with potential buyers, however, Chinese buyers could be especially interested in signing new agreements with Qatar since exports from the U.S. could eventually be subject to tariffs if the trade war between China and the US continues to escalate. Related: Mexico’s New President Has The Energy Sector On Edge

Rystad Energy forecasts that at least 56 Mt of new LNG supplies will be needed by 2025. If Qatar goes ahead with the commissioning of the new trains the volumes could come online by the start of 2023 (considering four years of project development), thus an additional 33 Mt of capacity would still be needed by 2025 to keep the market balanced.

(Click to enlarge)

There are several projects awaiting a FID in the U.S. such as Sabine Pass Train 6, Delfin, Driftwood, Rio Grande and Texas LNG. Additionally, there are projects in other regions such as Mozambique LNG and Fortuna FLNG that have advanced negotiations. These projects could add the required additional capacity but would need to start their development by 2020 to avoid a supply shortage as demand continues to grow. On the other hand, there is a risk that too many projects take FID, leading to a loose market with depressed prices after 2020. Related: The Netherlands Can’t Afford To Keep Its Natural Gas Promise

Many of the planned projects have not secured project financing since the developers need to sign long-term supply agreements that can guarantee they can meet their financial obligations.

With the current tight LNG market driven by strong Asian demand and Asian Spot prices trading above $10 per MMBtu in the summer (a period when prices should theoretically drop), buyers could be more willing to sign new long-term supply agreements at the $8 per MMBtu level required to take the U.S. projects forward.

Overall, Rystad Energy expects Qatargas to take FID within 2018 or early 2019. The additional 33 Mt will have to come from the US and other international plants but developers need to avoid a race that could potentially create a supply glut.

By Rystad Energy

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage



Leave a comment
  • Bill Simpson on July 04 2018 said:
    It is amazing that much gas can be trapped underground. And the amount on the ocean floor dwarfs that.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play