As the global market for natural gas expands, so too do Qatar's exports - a recent agreement sees the country preparing to supply gas to France and Mexico.
Recently, Qatar took further steps on the path to becoming the world's largest supplier of liquefied natural gas (LNG), with the signing of a sales and purchase agreement (SPA) between Qatargas 2 and French energy company, Total.
The SPA permits Total to buy up to 5.2m tonnes per year (mtpa) of LNG for 25 years from Qatargas 2, which consists of two LNG process trains and is scheduled to begin production in 2008.
Qatargas already operates three LNG process trains as part of Qatargas 1 - a venture between Qatar Petroleum (QP), ExxonMobil, Total, Mitsui and Marubeni. Each of the process trains in Qatargas 1 has an expanded capacity of 3.3 mtpa. The process trains for Qatargas 2 are much larger and both will have a capacity of 7.8 mtpa.
RasGas 3, another venture by QP and ExxonMobil, is also constructing two process trains with a capacity of 7.8 mtpa.
Despite a moratorium on further developments in Qatar's North Field, the largest non-associated gas field in the world, a number of projects by RasGas and Qatargas had already been agreed and will continue. The freeze itself comes, according to QP, in order to regularise development, though is scheduled for review in 2007.
Having previously been overshadowed by oil because of the past difficulties of transporting natural gas, it has only been relatively recently that the LNG industry has truly taken off. The advent of technology that allowed gas to be liquefied by cooling it to below -162 C made transportation much easier. Now, with the decreasing cost of such technology and the rising price of oil, LNG has emerged as the industrialised nation's energy source of choice.
Most industry experts agree that the global LNG industry is expanding at around 7% per year, and Qatar's LNG markets are growing as the world market for LNG itself expands.
In 2005, Qatar produced 23 mtpa of LNG, but with Qatargas 2 and RasGas 3 coming online in 2008, by 2009 QP expects to be producing 61 mtpa of LNG and by 2012, with the development of further trains, that figure is projected to increase to 77 mtpa. By 2012, Qatar is expected to be the largest producer of LNG in the world.
For years, Japan and Korea remain major importers of Qatar's natural gas with Japan, the world's largest importer of LNG, importing 6.2m tonnes of LNG from Qatar in 2005 - around 63% of Qatargas' total exports that year. Spain constituted Qatargas' second-largest customer in 2005, importing 2.9m tonnes of LNG.
However, geographically Qatar is well place to serve, not just Asia, but also the US and European markets.
The recent SPA between Total and Qatargas 2 extends Qatar's market reach to France and Mexico, making Qatar the first Gulf state to supply LNG to the Mexican market.
As European countries seek to diversify their energy imports away from Russia, the UK will soon import as much as 20% of its LNG from Qatar, while an agreement with RasGas 2 will see Qatar's LNG sector expanding to supply markets in both Italy and Belgium.
Meanwhile, with over 65% of Qatar's GDP coming from the oil and gas sector, these revenues are now being ploughed into reforming and diversifying the country's economic foundations.
QP has allocated QR122bn ($33.54bn) for Qatar's expanding natural gas sector, as part of a five-year plan starting in 2006, not to mention the QR40bn ($11bn) allocated to Qatar's gas to liquid (GTL) industry - the country's ultra-clean diesel fuel projects which also use natural gas.
As the market for its LNG expands, Qatar has found itself increasingly wealthy and now has the highest GDP per capita of any country on earth. The winning combination has been to develop additional energy supplies against a backdrop of rising energy prices - a combination that is literally fuelling the growth in the country's economy.
