QP Cuts Spending, But Pushes on with LNG Expansion
Qatar Petroleum (QP) intends to cut capital and operating expenses by 30% this year in response to the collapse in oil and gas prices, its CEO Saad al-Kaabi said in a webinar organised by the US-Qatar Business Council on May 22. But the move will not affect QP's development plans, al-Kaabi, who also serves as Qatar's energy minister, said.
Qatar has a two-stage plan to expand its liquefaction capacity from 77mn mt/yr at present to 110mn mt/yr in 2025 and 126mn mt/yr in 2027. QP is moving "full steam ahead" with the expansion, al-Kaabi said, having started development drilling at the North Field East (NFE) field at the end of March. The company also reserved capacity last month at a Chinese shipyard to build a new fleet of LNG carriers (LNGCs) for the project.
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Some delays have occurred, however, with al-Kaabi noting that the deadline for bids for onshore engineering, procurement and construction contracts for NFE had been pushed back to September, with final awards to be announced by the end of the year. Earlier QP had set an April deadline for offers.
Despite the cuts, QP will also continue growing its international business, Kaabi said, which has seen it acquire interests in offshore exploration projects across the world. It has just signed a deal to farm into two blocks off the Cote d'Ivoire operated by France's Total.
"We are in it for the long haul. We are the most cost-effective producer and can withstand market shocks," al-Kaabi said. "We are in very good financial shape and we are still looking for good investment opportunities."
LNG prices have plunged to historic lows as the Covid-19 pandemic has taken a toll on demand. Even before the crisis, the market was oversupplied as a result of new production coming on stream and weaker demand in Asia.
Qatar is not considering production cuts at this stage, and thanks to the kingdom's low costs, it will never be compelled to take such a step because of low prices, al-Kaabi said.
"In such a scenario of forced production curtailment because of price, many other producers would be forced to shut down before Qatar due to their high production cost, therefore there is absolutely no way that we would curtail production," he said.