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Qatar 'may lose top LNG spot'

London, September 30, 2011

Australia may overtake Qatar as the world's biggest producer of liquefied natural gas (LNG) by 2020 as seven vast production plants dotted along its coastline plan to start operating later in the decade, said experts at a summit in London.

Speaking at the conference, Total's  head of LNG Guy Broggi said, 'The new Qatar is Australia because final investment decisions (FIDs) have already been taken.'

He was referring to the five sanctioned projects and several more that are expected to reach FID in 2011-2012.

A moratorium on expansion in Qatar until 2015 is further expected to boost Australia's chances of taking the top spot.

Australian liquefaction capacity is forecast to increase five times from current levels to 100 million tonnes per year by 2020, Alan Coupland of the country's bureau of resource and energy economics told delegates.

Qatari output meanwhile is largely fixed at 77 mta until 2015 at the earliest, although plans to debottleneck existing facilities may free up plants to produce more.

'These new projects are needed because there is not enough flexible LNG supply to meet forecast demand in the [middle part of the decade],' GDF Suez's vice president of Prospection for LNG Supply, Frederic Deybach, said.

A giant wave of Australian liquefaction capacity will likely stretch Asia's ability to absorb the planned volumes, potentially triggering a global gas glut as surplus cargoes flood world markets and pressure spot prices lower, Deybach added.

Much depends on demand in Asia, he said, raising the possibility that a glut could be avoided if fallout from the Fukushima nuclear disaster in Japan leads to a permanent exit from nuclear power.

But a race to lock-in supply deals with key importing countries may shield Qatar from Australia's ascendancy.

'In the meantime, Qatar can take longer-term markets away from Australia by locking in supply contracts now,' Chris Meyer, LNG analyst at consultancy Poten and Partners said in his presentation. 

BP chief economist Christof Ruhl said LNG production will almost equal pipeline supplies by 2030 thanks to the wave of new liquefaction capacity coming onstream in Australia and elsewhere.

Gas is set to remain the fastest growing fuel over the same period, he said, with LNG expected to grow at twice the rate of gas as flexibility becomes increasingly prized by traders and buyers.

The super-cooled gas already accounts for between 25 per cent and 30 per cent of internationally traded gas, analyst figures show, with LNG making up 9 percent of global gas demand.-Reuters




Tags: Qatar | Australia | overtake | LNG supplier |

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