Sheikh Khalid bin Khalifa Al Thani, CEO, Qatargas: Interview

Interview: Sheikh Khalid bin Khalifa Al Thani

What impact will the recent merger of Qatargas and RasGas have on the country’s ability to compete in the global LNG market?

SHEIKH KHALID BIN KHALIFA AL THANI: The merger of Qatargas and RasGas, which was completed in January 2018, has resulted in the creation of a unique global LNG operator in terms of size, service and reliability. The merger has allowed us to pool the resources and capabilities of the two companies in order to promote operational efficiency and cost effectiveness, achieving approximately QR2bn ($549.3m) in annual savings.

The consolidation of Qatargas and RasGas into a single company will enhance our ability to offer more flexibility in managing Qatar’s total LNG export capacity of 77m tonnes per annum (tpa). The new Qatargas will also continue to apply innovative technologies that will help us to improve our market visibility in a continuously evolving energy landscape.

Demand for LNG is expected to increase in the future as the global focus on addressing climate change continues, and nations seek to diversify their energy mix towards cleaner fuels. Qatar will play an important role in meeting global demand for reliable sources of clean energy, and is committed to increasing LNG production to 110m tpa by 2024.

How would you assess the country’s gas production, refinery and export infrastructure in terms of its capacity to handle future growth?

SHEIKH KHALID: Qatar currently has the world’s largest LNG production capacity, with 77m tpa and an overall condensate refinery capacity of 306,600 barrels per stream day. Furthermore, we are the world’s second-largest helium producer, meeting approximately 25% of total global demand – with an overall production capacity of 2bn standard cu feet of liquid helium. The country’s export infrastructure currently consists of a fleet of 25 purpose-built vessels for the international transportation of LNG, each with a capacity of between 137,000 and 152,000 cu metres. In addition to this, Qatargas has a fleet of 31 Q-Flex and 14 Q-Max vessels on long-term charter. These vessels are capable of transporting 210,000 cu metres and 266,000 cu metres of LNG per year, respectively.

Following the completion of extensive reservoir studies, field tests and analysis in 2017, Qatar Petroleum announced its intention to raise its LNG production by developing new projects in the southern sector of the North Field. Upon completion of this project, which is expected between 2023 and 2024, these developments are projected to increase Qatar’s LNG capacity from 77m tpa to 110m tpa.

To what extent do you expect that the globalisation of the gas market will impact the traditional state-owned producers?

SHEIKH KHALID: LNG has played a major role in the development of global natural gas trade. At the beginning of the 1990s there were only nine LNG-producing countries and only eight importers; by 2017 this had increased to 18 exporting countries and 37 importers. In 2017 the total volume of imported LNG reached 290m tonnes, with 27% supplied on a spot or short-term basis. The increase in this trade reflects broader changes in the market, offering more flexibility for customers. Our geographic location makes it possible to supply markets in Europe, Asia and the Americas, while offering greater possibilities for arbitrage between the three markets.

New LNG projects continue to be capital-intensive, requiring third-party financing, and as customers continue to value security of supply, long-term contracts should continue to dominate the industry. The only difference is that the average duration of these contracts has been shortened from 20-25 years in the past to 10-15 years currently; producers are also offering more flexibility on the main terms of conditions including volume, seasonality and destination.