Qatar National Bank Expects Qatar to Successfully Handle Global LNG Oversupply

Qatar is well placed to handle the expected increase in global LNG supplies, Qatar National Bank (QNB) said in a report.

QNB expects global LNG supplies to increase significantly to 297mn tonnes per year in 2017 from 245mtpy in 2014, reported Gulf Times.

Few major projects have been recently completed and several LNG projects are under construction.

“However, the viability of many of these projects is being threatened by a number of factors, not least the recent collapse in crude oil and LNG spot,” QNB said in a report released Saturday.

QNB stated that Qatar is well placed to compete with the expected increase in supply as it is the lowest cost LNG producer globally.

According to QNB, very few of the projects globally are likely to be considered viable for a number of reasons in the current environment, Gulf Times reported.

Low oil prices, slowing Chinese economy, rising construction cost, oversupply and reluctance of buyers to enter long-term contracts are the reason QNB thinks can make the various project unviable.

“In this environment, we expect few new LNG projects to be initiated in the short-term. LNG projects have a construction period of 4-6 years. Therefore, a delay in initiating new projects over the next year or two, should lead to tighter LNG markets in the early 2020s,” QNB said. “Qatar is in a strong position versus new producers thanks to its competitive pricing power and the long-term contracts it already has in place.”