Gulf state plans to raise LNG production capacity to 77m metric tons by early next year.
Qatar, the world’s biggest producer of liquefied natural gas, will announce new LNG sales agreements this week, a senior executive of Qatar Liquefied Gas Co said.
“We will announce about a deal or two shortly, within this week,” chief operating officer Ahmed Yousef al Khulaifi said at a conference in Doha today. He didn’t identify the counterparts for the planned agreements.
Qatar has signed contracts with China, Poland and other LNG buyers in recent years, amid projections that demand in the US won’t be as strong as expected because of a rise in American shale gas production. The Arabian Gulf sheikhdom plans to raise its LNG production capacity to 77 million metric tons by early next year. LNG is gas cooled to a liquid for transportation by ship.
Abdullah bin Hamad al Attiyah, Qatar’s oil minister, said last December that he expected to sign an agreement to supply an annual 7 million tons of the fuel to China by the end of this year. Qatar Liquefied Gas, known as QatarGas, has already committed to sell 5 million tons a year to PetroChina and China National Offshore Oil Corp, according to Bloomberg data.
Qatar’s Ras Laffan Liquefied Natural Gas, also called RasGas, is discussing LNG pricing with India, after Qatar agreed to supply an additional 4 million tons of the fuel each year to that country by 2014, Indian Oil Secretary S Sundareshan said in March.
E.ON Ruhrgas is in talks with Qatar about possible contracts of various durations, Bernhard Reutersberg, the German gas company’s former chief executive officer, said in May.
Qatar sells most of its LNG under long term contracts, some of which include diversion clauses that allow it to reduce shipments, according to a July report by Qatar National Bank.
Qatar has redirected supplies originally intended for the US to countries such as China that offered to pay higher prices, al Attiyah said last year. Rising gas output in the US has contributed to a 21 percent fall in US gas prices over the past 12 months. Oil has gained 17 percent over the same period.
QatarGas and RasGas together will be able to export the equivalent of 3.75 trillion cubic feet a year of gas in liquefied form, once all 14 of the companies’ production plants are in operation by early 2011.
The last of RasGas’s seven production plants started operating earlier this year. QatarGas will begin producing LNG at its sixth production plant in December, al Khulaifi said. QatarGas expects its seventh and final production unit to be ready by February, he said.
Mexico and Dubai will start receiving contracted volumes of LNG next year, al Khulaifi said.
QatarGas and RasGas shut most of their production plants earlier this year for maintenance periods lasting for at least three weeks apiece.
“We have passed the peak of maintenance in the summer, and we are in commissioning for train six and seven, so this year is a very challenging year,” al Khulaifi said. Maintenance in 2011 won’t be “as major as we have done.”