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Gulf states need faster progress on LNG projects

19 July 2023

Commentary
Indrajit Sen
Oil & gas editor

By investing an estimated $30bn to significantly ramp up its liquefied natural gas (LNG) production capacity, QatarEnergy has distanced itself from its Gulf competitors.

The state-owned major’s LNG production potential is projected to balloon to 126 million tonnes a year (t/y) by the end of the decade, when the two phases of its North Field LNG expansion programme – North Field East and North Field South – are commissioned.

An additional 13 million t/y of output in the US is on course to enter its LNG production portfolio around the middle of this decade, when the Golden Pass facility in Texas – in which the Qatari state enterprise is the majority 70 per cent stakeholder – achieves start-up.

Market share

Speaking at a recent LNG industry conference in Vancouver, Canada, Saad Sherida al-Kaabi, Qatar’s minister of state for energy affairs and president and CEO of QatarEnergy, said: “About 40 per cent of all the new LNG that will come to the market by 2029, when all our projects are up and running, is going to be from QatarEnergy.”

While the company surges ahead to become the world’s top LNG supplier, a position it is expected to retain well into the future, other Gulf state energy players attaining even half of its LNG output capacity in the long term appears a distant possibility.

However, global demand for LNG is expected to grow by more than 3 per cent annually to 2035, with some 100 million metric tonnes of additional capacity required to meet both demand growth and decline from existing projects.

Significant opportunities

In such an LNG boom scenario, the other GCC energy producers are still left with a lot of commercial opportunities. They need not compete with QatarEnergy on production capacity, but can make gains in terms of market share by steadily increasing their output over the years.

Regional players seem totally aware and keen on the opportunity, as some of the projects they have undertaken suggest.

Planned LNG projects

The natural gas business of Abu Dhabi National Oil Company, Adnoc Gas, received technical bids from contractors in June for a project to build an LNG export terminal project in Ruwais, Abu Dhabi.

Adnoc Gas had originally planned to build the terminal in the UAE’s geopolitically strategic emirate of Fujairah, which sits outside the Strait of Hormuz on the coast of the Gulf of Oman. In early May, however, the company announced it was shifting the location of the project from Fujairah to Ruwais.

Adnoc Gas, however, is understood to have kept the size and scale of the LNG complex unchanged. The planned export terminal will have the capacity to produce about 9.6 million t/y of LNG from two giant processing trains, each with a capacity of 4.8 million t/y.

Oman terminal

On the other hand, French company TotalEnergies is progressing with its planned project to build an LNG bunkering and export terminal in Oman’s northern city of Sohar.

TotalEnergies is leading a joint venture named Marsa LNG, which is the terminal project's developer. Marsa LNG was formed in December 2021 through an agreement between TotalEnergies and the sultanate’s state energy holding company OQ, with the partners owning 80 per cent and 20 per cent stakes respectively.

TotalEnergies recently asked contractors participating in the Marsa LNG terminal project’s feed-to-EPC competition to submit revised proposals for the front-end engineering and design (feed) based on the changes it has made to the scheme's scope.

Aramco plans

Saudi Aramco too is understood to have planned an LNG terminal on the kingdom’s east coast to process and export increased volumes of gas from its Jafurah unconventional gas reserve, as well as other gas production projects.

The plans by GCC energy producers to grow their LNG portfolio are clearly in place, and so is the money required to realise them. Success will, however, depend on how swiftly these companies can make progress with their projects, as it is only in their interest to move quickly to be able to effectively make hay while the sun is shining.

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Indrajit Sen

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