DOHA (Reuters) – Qatar will further raise gas production despite a steep drop in global gas prices, pushing ahead with plans to extract more of the resource amidst fierce competition with rivals such as the United States.
QatarEnergy chief Saad al-Kaabi announced on Sunday a new expansion of its liquefied natural gas production that will add a further 16 million tonnes per annum (mtpa) to existing expansion plans, bringing total capacity to 142 mtpa.
The Qatari announcement comes as US gas prices trade near an all-time low if adjusted to inflation after a decade of meteoric rises in output which made the US one of the top oil and gas exporters.
Prices of gas in Europe also fell steeply despite a drop in Russian supplies after the US and Qatar helped replace lost volumes.
Kaabi said gas markets in Asia would continue to grow and Europe would still need more gas for the foreseeable future.
"We still think there's a big future for gas for at least 50 years forward and whenever we can technically do more, we'll do more," he said at a press conference to announce the expansion in Doha.
"We see that Europe is going to need gas for a very, very long time. But the growth in Asia is definitely going to be bigger than the growth in Europe, basically driven by population growth."
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With this added boost, the overall expansion of the North Field from 77 mtpa currently to 142 mtpa by 2030 represents an increase of 85 per cent in production.
Qatar is among the world's top LNG exporters, competition for which had ramped up since the beginning of the Ukraine war in February 2022.
Despite the price drop all major gas producers including the US, Australia and Russia want to further increase output betting on further demand growth and worries that their gas might not be needed decades from now if energy transition makes green energy cheaper.
This latest expansion may not be the last for the Gulf energy giant as Kaabi said appraisal of Qatari gas reservoirs would continue and production would be further expanded if there is a market need.
TWO MORE TRAINS
State-owned QatarEnergy has already signed a string of supply deals with European and Asian partners in its massive North Field expansion project, which was expected - prior to Sunday's announcement - to begin producing 126 million mtpa of LNG per annum by 2027, from the current 77 mtpa.
Exploration activities in the west of North Field prompted the company's decision to expand further.
Kaabi did not give a cost for the project but said it would be in the billions of dollars. "It is difficult to give you a number now for the cost of the expansion, but it is certainly in billions," he said.
"We will start preliminary engineering studies for the project and then at the right time we will announce how much is the cost when the project is settled."
In December, Kaabi told Reuters that QatarEnergy had been drilling wells to assess expansion opportunities beyond the North Field East and North Field South phases.
This latest expansion will require the construction of two LNG trains, in addition to six already underway for the earlier expansions.
On partnerships for the new trains, Kaabi said QatarEnergy will go ahead and begin the engineering phase of this project on its own without seeking partners and then take a decision on partnerships later.
The North Field is part of the world's largest gas field which Qatar shares with Iran, which calls its share South Pars.