• 12 Jul 2017

The recent announcement made by Qatar Petroleum State Company for a 30% increase in LNG production in the next 5-7 years has been interpreted by specialized agencies and world's press as a price war statement that primarily concerns Asia, but that will also affect Europe.

At the beginning of April - as reported by Sissi Bellomo a journalist from Sole 24 ore - Qatar announced a 10% increase in LNG production, which has been now tripled. It is remarkable that this decision came before Trump's visit to Riyadh and consolidation of US alliance with Saudi Arabia, but especially before the diplomatic war from Arabia, Egypt, United Arab Emirates and Bahrain, against Qatar.

Qatar exports natural gas mainly towards the East (South Korea, Taiwan, Japan, China and India). These markets are increasingly threatened by the new Australian and American production, while also Russia will export natural gas via pipeline in China since 2019. The LNG market, although with growing consumptions, it is expected to be abundant until the early years of 2020, but, considering this new Qatar production, it will remain abundant even further.

The excess of supply over demand will also have a positive impact on the European market, which will absorb the productions - especially Americans - crowded-out in Asia. LNG supplies from the Atlantic will increase competition with the productions of Norway, Nigeria and Algeria, with benefits for all consumers: lower prices, less pollution and CO2. An American Shale LNG cargo arrived just yesterday in Great Britain.

According to analysts, Qatar's new production will start without being contracted, and will therefore focus primarily on spot markets, mainly represented by new consumption (typically the small scale LNG ones) for shipping and land transport sectors.

In the field of LNG maritime infrastructures development, Qatar and Shell, the world leaders in the liquid methane sector, signed a few days ago a collaboration agreement that provides a 50 million tonnes demand of LNG by 2030. At the following link it is possible to find the news http: //www.conferenzagnl.com/shell-qatar-petroleum-assieme-bunker-marittimo-gnl-livello-globale/

Against the Opec's strategy to reduce the world's oil supply in order to raise its prices, Qatar - which has the lowest LNG mining and production costs - opposed an increase in supply, aimed at maintaining the traditional Market share and at acquire new ones.

More than a price war within the LNG market, we are probably facing the first explicit strong competition of gas towards oil, even in its most typical final uses, such as transport and petrochemicals.