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Qatar Petroleum has decided to postpone the start of expansion operations at its North Field, four unnamed sources told Reuters.
The Qatari state energy firm was supposed to select foreign partners for the expansion soon, but it will delaying that, the sources said.
Gas prices have been low for months amid a growing glut, falling demand for LNG in China, and still growing production, especially in the United States, casting a shadow over more than one project.
Qatar’s North Field, which it shares with Iran (South Pars), is the largest gas deposit in the world. Qatar had previously put a moratorium on any production expansion at the field, but two years ago it took many market players by surprise when it announced its plan to ramp up production. That decision was made as Australia began challenging—successfully—Qatar’s number-one position as the world’s largest LNG exporter and cheapest producer.
Qatar Petroleum shortlisted half a dozen energy supermajors as partners for the expansion project and said it would announce their names in the first quarter of this year.
Interestingly enough, Reuters recalls that last year Qatar Petroleum had also said it planned to up its initial production expansion plans from 40 percent more than current levels by 2027 to 60 percent more than current levels, which would come in at a total of 126 million tons of LNG, from 77 million tons currently.
Meanwhile, the LNG price benchmark for Northeast Asia, according to S&P Global Platts has entered a bear market, slumping by over a third since the start of the year to an all-time low of $2.763 per Mmbtu as of last week.
“I think Qatar has decided to firm up the capex of the project before they go to international oil companies. I think the decision should be ready by the end of 2020,” one of the Reuters sources said.
“Qatar’s cost base is very low compared to other projects but in today’s environment, every project has to compete for capital,” another said.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.