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Bloomberg

King of LNG deprives its rivals of dominating the global market

(Bloomberg) – The world’s largest exporter of liquefied natural gas dramatically increases production and cuts competitors in a bid to squeeze them out of the market. Qatar cuts prices, continues $ 29 billion project to boost fuel exports . by more than 50%, hampering prospects for new factories elsewhere. It has also put together a sales team to compete in the nascent cash market and push more aggressively towards Asia, according to people familiar with the matter.The strategy marks a change for Qatar, which has barely increased production. over the past five years and has traditionally prioritized pricing. on market share. Increased competition, especially from the United States and Australia, has forced the Persian Gulf state to become more agile and attract buyers to Asia, a hotspot for gas demand. renewable energy adds to the country’s sense of urgency. While LNG was until recently touted as a bridge between coal and oil and solar and wind power, it is falling out of favor with some governments as they step up efforts to slow climate change. questions about the need for other supply options, ”said Julien Hoarau, head of EnergyScan, the analysis unit of the French public service Engie SA. “He’s still number one, but the United States has never been so close, so Qatar had to move if they were to maintain their leadership position.” The United States nearly exceeded Qatar’s monthly exports for the first time in April, while Australia did. has been neck and neck with the Middle Eastern nation over the past year, according to ship tracking data compiled by Bloomberg. As Gulf Coast projects develop, the United States is expected to briefly become the world’s largest supplier by 2024, before Qatar regains that status later in the decade, according to BloombergNEF. factors play into the hands of Qatar. China, one of the fastest growing LNG markets, has been reluctant to import more from the United States or Australia due to trade and geopolitical tensions, but Qatar’s main advantage is that it has the lowest production costs in the world thanks to an abundance of easy-to-use products. extract gas, much of which is contained in the giant North Field that stretches as far as Iran.Bonds State-owned energy company ComingQatar, which could soon sell up to $ 10 billion in bonds to fund gas expansion, said the project would be viable even with $ 20 oil. a barrel, 70% less than current levels. LNG contracts are typically tied to oil, which allows Qatar Petroleum to price lower than other exporters can handle, traders say. The company has sold LNG in recent months at around 10% of the price of Brent, including to China and Pakistan, while it pegged the level at 15%. “No one can match the Qatari costs,” said Jonathan Stern, a senior researcher. fellow at the Oxford Institute of Energy Studies. “They can do whatever they want and everyone will have to react as they can. And, especially when the market is in surplus and prices are low, it will impact the profits of the competition. QP executives have traveled across Asia in recent months to sign export deals. Their efforts led in March to a 10-year contract with Beijing-based Sinopec, signed 10% -10.19% Brent. Qatar’s Energy Ministry and QP did not respond to requests for comment. A few years ago, the demand for LNG is expected to increase sharply over the next few decades. Gas emits less carbon dioxide than most other fossil fuels when burned, while renewable energy projects were still too expensive to power large-scale power grids, factories and transportation. We are not afraid Even as Qatar seeks to make the most of its strengths, there are obstacles to achieving full dominance. Many buyers want a diverse group of suppliers. Russia’s Yamal LNG project and the upcoming Arctic LNG 2 plant, run by Novatek PJSC, are among those that will remain competitive as Qatar increases its exports, analysts at Citigroup Inc., America’s largest LNG exporter, Cheniere said. Energy Inc. said it unfazed by Qatari’s moves. Some importers are drawn to US companies offering more flexible delivery terms and prices unrelated to oil, which has climbed nearly 30% this year. “We are not afraid,” Cheniere commercial director Anatol Feygin said this month. “We are part of a sort of diversification of the sourcing and subcontracting structure with Qatar Petroleum and our friends at Novatek.” Yet American projects are among those most likely to struggle. According to BloombergNEF analysis, at least 10 of them, five in Texas and four in Louisiana, are unlikely to get enough funding to be completed. US companies must buy gas at around $ 2.50 per million British thermal units, well above Qatari wellhead prices of $ 0.30 or less. LNG spot prices are at least $ 7.80 per million Btu in Asia and $ 6.80 in Europe, said David Thomas, independent advisor and former head of LNG at Vitol, the largest independent oil trader in the country. world. For comparison, Asian fares have averaged around $ 6.80 over the past five years. The savings for producers in Australia and Africa are similar, Thomas said. The lack of new supplies from other countries will benefit Qatar, said Energy Minister Saad Al-Kaabi, also CEO of QP, in an interview with Bloomberg in February. . “Our expansion is very timely,” he said. “Qatar’s strategy appears to maintain its global market share and maximize sales, before the gas market begins to contract,” Stern said from OIES. “It’s a competitive and strategic rush. They recognize that the demand for LNG will eventually decline as the world moves forward in the energy transition. (Updates with comments from Qatar’s Energy Minister in the penultimate paragraph.) More articles like this are available on source bloomberg.com. © 2021 Bloomberg LP


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