How Qatar is building for growth in LNG

Qatar

Alistair Routledge, president and general manager of ExxonMobil Qatar, talks to TOGY about the Barzan Gas Project and Qatar’s role as an LNG exporter amid global gas market changes. ExxonMobil Qatar participates in 12 of Qatar’s 14 LNG trains and in the worldwide delivery of 60 million tonnes of LNG per year through its partnership with Qatar Petroleum in the Qatargas and RasGas joint ventures.

How will the Barzan Gas Project help Qatar to meet growing domestic demand for gas?
The $10-billion Barzan Gas Project was designed to support domestic expansion plans. Demand for gas is driven by the needs of Qatar’s growing population and new infrastructure projects, particularly for electricity generation.
Train one will be on line by mid-2015, in time for the yearly electricity consumption peak. We expect the second train to follow six months later. At full capacity, each identical train will produce 22.4 mcm (800 mcf) of gas per day.
In 2011, construction of the Barzan plant began on a new plot at Ras Laffan, whereas all of Qatari company RasGas’s LNG trains and the Al Khaleej Gas Project were built on one plot. Regular shutdowns and maintenance of Qatar’s other gas-producing plants ensures that they keep running at full capacity to meet gas needs. Barzan is going to complete this existing production capacity to meet growing demand.

Will emerging worldwide LNG projects affect Qatar’s position as a leading LNG producer?
Production volumes are not the only component of what defines a leading position. Market positioning is also very important. Qatar is ideally placed to market its gas to different parts of the world, from Europe to Asia.
The quantity and quality of Qatar’s gas resources, as well as the construction and integration of the country’s LNG trains through an efficient development strategy, are also very important. Through technology, the capacity of Qatar’s LNG trains and tankers has doubled, and the country now has 14 LNG trains and 45 LNG carriers. This guarantees long-term reliability, flexibility and competitive cost of supply.
No other LNG producer seems able to provide Qatar’s level of long-term reliability and security of supply at the moment. The value you extract from your gas is more important than the volumes you produce.
Qatar has also shown its position as a global leader in the LNG industry by helping new markets develop. The development of Qatar’s gas industry allowed for a massive global market growth. It has opened up new LNG markets and supported Asian development by providing a cleaner and more economical energy resource.

Do you expect spot-market gas trading to grow and the proportion of long-term contracts in global gas trade to shrink?
The global perception is that there might be oversupply of LNG in the coming years, when new projects come on stream in Australia and the US. As a result, market buyers are less willing to commit to long-term contracts.
However, over the medium- to long-term, the sector relies on huge capital investments in order to build LNG trains, develop the gasfields that supply them and invest in LNG tanker fleets to bring these volumes to the markets.
When companies cannot finance these projects, they need to borrow money, and without long-term sales commitments, project financing becomes more difficult. Consumers also benefit from long-term commitments as it ensures constant and reliable gas deliveries. Therefore, there will always be a need for large volumes of long-term contracts to underpin major investments.
Spot markets are developing to create market liquidity over the short term. They allow flexibility to meet demand peaks, for instance when winters get particularly tough, or in the event of catastrophes such as the 2011 Japanese earthquake.

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