Qatar halts further development of LNG plants

Qatar, the world’s largest producer of liquefied natural gas, has called a halt on plans to build any new LNG or gas to liquid plants.

There are currently 14 LNG plants being built, with the final three scheduled to start production by the end of 2010. In 2011, Royal Dutch Shell Plc will start production from the world’s largest gas to liquid plant.

In 2005, Qatar stopped all projects in its North Field, the world’s biggest gas deposit, as it carried out studies on the reservoir. The announcement that there are no plans to build more plants means that if the ban is lifted, any additional gas output will be used domestically or to expand existing projects.

Saad Al Kaabi, the director of oil and gas ventures at state owned Qatar Petroleum says that upgrading existing units will be the cheapest and most effective way to expand. “If we go for grass roots projects, we’ll have to set up new operating projects, we’ll have new costs,” he added.

Samuel Ciszuk, an analyst at IHS Global Insight said in a telephone interview: “It’s not happy news. Qatar has been one of the few places where international oil companies have had access to such huge reserves. ““It has offered lucrative investments for foreign companies,” he added.

Qatar opened its deposits to international companies less than two decades ago, with its first shipment of LNG cargo going out in 1996 in a joint venture with Exxon.

Andrew Person, an analyst at Wood Mackenzie endorsed Qatar’s decision, saying: “In terms of Qatar preserving its resources, it’s a sensible decision.” He went on to explain that the real focus of the global LNG business is currently in Australia and Asia.