Qatar to become world's leading LNG producer

The two companies will build two LNG processing trains - units where gas is liquefied - with a capacity of 7.8 million tonnes a year each for the Qatargas-3 and Qatargas-4 projects in Ras Laffan industrial city. Both are integrated projects and designed to produce natural gas, liquefied petroleum gas and condensates.

'My understanding is that the contract is the biggest project in our business,' said Chiyoda's senior executive VP Hiroshi Kobayashi. Qatargas 3 is jointly owned by Qatar Petroleum (68.5%), ConocoPhillips and Mitsui. Qatargas 4 is a joint venture between Qatar Petroleum (70%) and Royal Dutch Shell.

US main customer

The US will be a primary market for the gas produced by the new units. This follows a memorandum signed in November 2005 by the US Energy Secretary Samuel Bodman that will mean America will buy up to 30 per cent of its entire LNG needs from Qatar. The agreement provides for the supply of some 15.6 million tonnes of LNG a year to the US market with deliveries beginning by 2009.

The foundation for Qatar's ambitious plans lies in the emirate's offshore North Field. This huge reservoir of gas discovered in 1971, is the largest field of gas that is not associated with crude oil production in the world. Proven gas reserves in the field are currently put at 910 trillion cubic feet. While behind estimated Russian and Iranian reserves, Qatar does have the highest proven gas reserves in the Middle East and which total 15.3 per cent of entire world reserves.

The country's Oil Minister Abdullah bin Hamad Al Attiyah has said that Qatar's investments into hydrocarbon ventures could exceed $60 billion. Plans in the gas sector are to go beyond 36 million tonnes production per year in the next decade. This would mean a doubling of existing output.

Gas demand surges

The emirate's huge investment has been stimulated by steadily rising demand for gas supplies from customers in Asia including Japan, South Korea and India as well as Europe and the US.

Qatar's first markets for its LNG exports were Japanese and South Korean power companies. India followed. Sales have also commenced to Spain's Enagas and Italy's Edison. A significant new customer is Northern Europe, in particular the UK. Due to its rapidly depleting gas reserves, the latter is due to become a net importer of gas and will take the production from two of Qatar's LNG trains starting in the winter of 2007.

Qatar's cash flow from natural gas revenues is expected to make an increasing contribution to state revenues and surpass those from oil sales in the next five years.
LNG projects are already serving to expand national revenues. Qatar's gross domestic product, which is already the fastest growing in the region, is expected to show an eight per cent rise for 2004.