Qatar's major expansion of its liquefied natural gas capacity will help it to be the biggest LNG producer in the world for at least the next two decades, the country's Minister of State for Energy Affairs, Saad Sherida Al-Kaabi, told Bloomberg Television in an interview.
State firm Qatar Petroleum took last week the final investment decision to build what it says would be the world's largest LNG project in terms of capacity, as the tiny Gulf nation aims to raise its annual production by 40 percent by the end of 2025.
Qatar Petroleum sanctioned the North Field East Project (NFE), which is set to raise Qatar's LNG production capacity from 77 million tons per annum (mmtpa) to 110 mmtpa. The project, expected to start production in the fourth quarter of 2025, will cost US$28.75 billion. Qatar also plans another expansion phase at the North Field, set to further increase Qatar's LNG production capacity from 110 mmtpa to 126 mmtpa, with an expected production start date in 2027.
"This is one of the most competitive, if not the most competitive, projects on the planet," Al-Kaabi, who is also the President and CEO of Qatar Petroleum, told Bloomberg.
The first phase of the project will be so low-cost that it would be viable even at oil prices below $20 a barrel, Al-Kaabi told Bloomberg.
"At a long-term breakeven price of just over $4 per million British thermal units, it's right at the bottom of the global LNG cost curve, alongside Arctic Russian projects," Wood Mackenzie research director Giles Farrer said last week, commenting on Qatar's LNG expansion project.
"Qatar is pursuing market share. This FID is likely to put pressure on other pre-FID LNG suppliers, who may find Qatar has secured a foothold in new markets," Farrer added.
Qatar's Al-Kaabi said that natural gas would be needed to allow a rise in renewable energy sources.
"Gas is sort of in a Catholic marriage with renewables. They would need to stay together for a very long time for you to have the transition successfully," the minister told Bloomberg.
By Charles Kennedy for Oilprice.com
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