DOHA: Qatar will continue to increase gas output despite a sharp drop in global gas prices, pushing ahead with plans to tap more resources amid tough competition from rivals such as the United States.
QatarEnergy chief Saad al-Kaabi on Sunday announced a new expansion of its liquefied natural gas production that will add an additional 16 million tonnes per annum (mtpa) to existing expansion plans, bringing total capacity to 142 mtpa.
Qatar’s announcement comes as US gas prices are trading near historic lows when adjusted for inflation following a decade of meteoric output growth that has made the U.S. one of the world’s biggest oil and gas exporters.
Gas prices in Europe also fell sharply despite a drop in Russian supplies after the US and Qatar helped replace lost volumes.
Kaabi said gas markets in Asia will continue to grow and Europe will continue to need more gas for the foreseeable future.
“We still think gas has a big future for at least 50 years ahead, and whenever we can technically do more, we will do more,” he said at a press conference to announce the expansion in Doha.
“We see that Europe will need gas for a very, very long time. But growth in Asia will definitely be greater than growth in Europe, basically driven by population growth.”
With this additional increase, the overall North Field expansion from the current 77 mtpa to 142 mtpa by 2030 represents an 85 percent increase in production.
Qatar is among the world’s largest exporters of LNG, for which competition has increased since the start of the war in Ukraine in February 2022.
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Despite falling prices, all major gas producers, including the US, Australia and Russia, want to raise output further in a bid to further growth in demand and fear their gas may not be needed in decades if the energy transition makes green energy cheaper.
This latest expansion may not be the last for the Gulf energy giant, as Kaabi said the assessment of Qatar’s gas reservoirs will continue and production will expand further if the market needs it.
TWO MORE TRAINS
State-owned QatarEnergy has already signed a number of supply deals with European and Asian partners as part of its massive North Field expansion project, which before Sunday’s announcement was expected to start producing 126 million mtpa of LNG a year by 2027, up from the current 77 mtpa.
Exploration activities in the western North Field prompted the company’s decision to expand further.
Kaabi did not specify the cost of the project, but said it would be in the billions of dollars.
“It’s hard to tell you a number for the expansion costs right now, but it’s certainly in the billions,” he said.
“We will begin preliminary engineering studies of the project and then announce the cost in due course when the project is settled.”
In December, Kaabi told Reuters that QatarEnergy was drilling wells to evaluate expansion options beyond the North Field East and North Field South phases.
This latest expansion will require the construction of two LNG trains, in addition to the six already underway for earlier expansions.
Regarding the partnership for the new trains, Kaabi said QatarEnergy will go ahead and start the construction phase of this project on its own without seeking partners, and then make a decision on the partnership later.
The North Field is part of the world’s largest gas field, which Qatar shares with Iran, which calls its stake South Pars.