Middle East Eye: Qatar Positioned to Ride Out Low Natural Gas Price

Qatar is the self-touted world's top liquefied natural gas (LNG) supplier and swing producer. But low natural gas prices are changing the game, with sellers no longer able to dictate prices, while global LNG production is ramping up, making for an increasingly competitive market with much lower revenue returns.

Qatar had ridden the proverbial crest of the wave of high energy prices. It had invested tens of billions of dollars in energy infrastructure, especially in LNG, with projects coming online at an opportune time when oil was at around $100 per barrel and LNG selling for up to $13 per million British thermal units (MBTU).

Doha's returns from hydrocarbons, which account for 49 percent of its revenues and 90 percent of exports, hit an all-time high of $147.9 billion in 2013, but with oil now selling for around $30 per barrel, and gas more than halved on the spot markets to $5.75 MBTU, revenues this year are forecast at just $42.9 billion.

For the first time in 15 years, Qatar will run a deficit, of $12.7 billion, if not higher, as the budget is based on a conservative $48 per barrel of oil. “If (energy) prices keep going down, that means the deficit for Qatar will widen, and could hit $20-$25 billion. The link between oil prices and LNG is direct, and the more oil prices go down, the more LNG prices drop,” said Naser Tamimi, an independent Middle East analyst. MORE