20121202 efar qatar lng_v05


Published on

  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

20121202 efar qatar lng_v05

  1. 1. QNB Economics economics@qnb.com.qa 07 December 2012LNG Export Destinations are being DiversifiedQatar’s LNG boom has been phenomenal, according Spain (4.8m) and France (3.2m). Belgium importedto a report from QNB Group. Through the 1990s and 6.1m tonnes in 2011, up from 2.8m in 2007, some of2000s Qatar invested heavily in LNG production, with which was re-exported through recently-expandedexports beginning in late 1996. Ten years later, Qatar storage facilities at Zeebrugge port, designed towas the world’s largest exporter and in 2011 it support the development of an LNG spot market.exported 76m tonnes of LNG, accounting for 31% ofthe global market. The next largest exporter was According to QNB Group, Qatar is diversifying itsMalaysia with 24m, less than one-third of the tonnage. LNG export destinations. In 2007, Qatar exported to eight different countries and in 2011 it exported to 23In 2011, 47% of Qatar’s LNG exports went to the Asia different countries. In 2011, export destinationsPacific region and 42% to Europe. Asia has been the included the Middle East (UAE and Kuwait) andprimary export destination for some time, and received South America (Argentina, Brazil and Chile). Exportsan even larger share in 2007 of 79%. This region is to Argentina are set to rise after the signing of an SPAcharacterised by a shortage of hydrocarbon resources for 5m t/y starting in 2014. A new long-term SPA withcombined with rapidly rising demand for gas-fired Thailand is reported to have been signed and Qatarpower generation. The largest Asian destinations in recently made the first delivery of LNG to Singapore.2011 were Japan (12m tonnes), India (10m) and South Jordan has expressed strong interest in importingKorea (8m). LNG, and Qatar is helping it to build a regasification terminal in Aqaba. LNG Export Destinations (2011) (tonnes) Total LNG capacity is 77m tonnes. However, slightly Total = 76m less than this is usually exported owing to downtime for maintenance and repairs. Most of Qatar’s production goes towards meeting the long-term North commitments of SPAs. In 2012, Qatar had SPA America Europe contracts for around 55m tonnes, or 73% of its 32m Asia Pacific 5m production capacity. By 2014, SPA export 36m Middle East commitments will increase to 64m tonnes, or 84% of 2m total production. These new contracts are mainly to Asia Pacific and South America, meaning that South America Europe’s share of Qatar LNG exports is likely to fall. 1m Countries Qatar exported LNG to in 2011 The remaining production is exported on spot markets. In 2011, there was a rapid increase in the amount of Source: BP and QNB Group analysis Qatari LNG exports sold on the spot market to around 28% of production, up from 9% in 2010. This wasEurope’s share of Qatar’s LNG exports has increased owing to a combination of rising production in Qatarsignificantly, mainly as the UK has had to replace and a redirection of exports away from the US (as itsdeclining gas production from its North Sea fields. The domestic gas supplies increased sharply) towards theUK was the single largest importer of Qatari LNG in spot market. This was positive for Qatar as spot2011. It has long-term sales and production market prices remained high and demand was robust.agreements (SPAs) with Qatar for a total of 12m Demand from Japan was particularly strong as thetonnes per year (t/y) and in 2011 purchased a further country shut down its nuclear power plants in the4m tonnes of Qatari LNG on the spot market. aftermath of a tsunami and needed more LNG as an alternative power source.Other countries in Europe have also increased importsfrom Qatar to lower dependence on Russian supplies, In the period from 2014-21, around 16% of productionand to reduce carbon emissions by using more, is not covered by existing SPAs and is potentiallyrelatively clean, natural gas. Notably, this has led to available to be sold on spot markets. It is likely thatincreasing exports to Italy (6.1m tonnes in 2011), over time, new contracts will be signed to replace or 1
  2. 2. QNB Economics economics@qnb.com.qaextend existing contracts as their terms expire. A Asia Pacific and rising LNG prices will continue tonumber of potential SPAs are currently under support Qatar’s LNG export revenue despite the lackdiscussion, reportedly with India, Pakistan and Turkey. of new projects to increase capacity.According to QNB Group, this should keep theproportion of production sold on spot markets ataround 16% or lower. LNG SPAs and Spot-Market Exports (2005-40) (Tonnes) Implied spot market deliveries Assumed new/extended SPAs Total SPAs 76 76 76 76 76 76 16% 56 64 64 64 84% 22 57 53 50 35 35 29 19 Forecast/ Planned 4 0 2005 2008 2011 2014 2017 2020 2023 2026 2029 2032 2035 2038 2040 Source: GIIGNL, Qatargas, Rasgas and QNB Group analysisThe terms of the SPAs are not public but they aregenerally long-term agreements that are linked to oil-or gas-price benchmarks. Based on available volumeand revenue export data, Qatar’s average sales price ofLNG rose by 35% in 2011 from US$9/m Britishthermal units (mBtu) to US$12/mBtu. This increasewas in line with the benchmark Japanese LNG importprice index, which also rose by 35%.So far this year, Japanese LNG prices have averaged16% higher than last year at US$17/m btu. Gas pricesin Europe have been more restrained, only rising by8% on average, to US$11/m btu. Prices have been heldback in Europe as growth has been weaker than in theAsia Pacific.This provides a price incentive for spot marketdeliveries to be exported to the Asia Pacific, inaddition to the rising number of long-term SPAs beingsigned with countries in the region. According to QNBGroup, the combination of increasing deliveries to 2
  3. 3. QNB Economicseconomics@qnb.com.qa 3