Qatar to Further Boost LNG Output

Qatar Petroleum (QP) will add a fourth train to its LNG expansion project, taking output to 110mn metric tons/year, it said September 26. This means the increase will be around 43% from today's 77mn mt/yr. As Qatari LNG is generally perceived to be the cheapest to produce, the decision will put more pressure on projects globally to focus on costs.

Including a fourth train, the new overall project will produce about 32mn mt/yr of LNG, 4,000 mt/day of ethane, 260,000 barrels/day of condensate, and 11,000 mt/day of LPG and about 20 mt/day of pure helium.

QP CEO Saad Sherida Al-Kaabi said: "Based on the good results obtained through recent additional appraisal and testing, we have decided to add a fourth LNG mega train and include it in the ongoing front end engineering of the project. When the project is completed and all four new trains are online, Qatar’s LNG production capacity will reach 110mn mt/yr. This will increase Qatar’s total production capacity from 4.8mn to 6.2mn barrels of oil equivalent/day."

He added: "This new capacity increase will further strengthen our leading position as the world's largest LNG producer and exporter, and will further boost Qatar Petroleum's strategic growth plan. This production addition will have a great impact on Qatar’s economic growth and will help stimulate our local economy."

He said that LNG has "bright prospects" and the new expansion project reflects QP’s commitment to meeting its worldwide customers’ growing needs for this reliable and environmentally friendly fuel.

“On this occasion, I would also like to thank all my colleagues and partners in the energy sector in Qatar for their excellent dedication and support of our ambitious growth plans,” he added, but did not say who would be involved in the expansion.

The North Field Expansion Project is well underway with various activities currently ongoing, including the Front End Engineering and Design (FEED) of the onshore facilities, which is being executed by Chiyoda Corporation of Japan. The engineering, procurement, construction and installation (EPCI) contract for the offshore wellhead jackets is expected to be awarded before the end of the year, and development drilling activities are expected to start imminently. A contract to design the latter was awarded in May to US contractor McDermott.

Fifteen months ago QP said it would increase LNG production by some 30% by 2025 to reach 100mn mt/yr. Now it has revised that increase to 43% and an eventual plateau of 110mn mt/yr. Partners though have yet to be publicly announced, although the low production costs mean that supermajors will defer some of their existing LNG projects in favour of joining Qatari ones, if offered the chance.

Wood Mackenzie global gas/LNG research director Giles Farrer commented: “Our estimate of capex for the three megatrains previously announced was around $24bn, encompassing both the upstream and liquefaction components of the project. Qatar could probably add an additional train without significant additions to capex. However, making sure megaprojects are delivered on time and on budget will be a huge undertaking.” 

Since Qatar announced its initial plan, the market environment has improved, added Farrer: "Qatar is doubling down, making sure that it will be fully able to benefit from LNG market upside. Furthermore, one of Qatar’s major competitors for new supply development – US LNG – is currently engaged in a tariff war with China, the world’s largest growth market for LNG. Qatar could see this as an opportunity. It has recently signed a contract doubling the volumes that it will sell to PetroChina and is likely to be looking at further opportunities to supply the Chinese market.”