Qatar Well Positioned to Face Lower LNG Prices, Says Standard Chartered

Qatar is well placed to withstand lower LNG prices as “world’s lowest-cost producer”, according to a report by Standard Chartered.

“LNG from markets such as Australia and Mozambique is much more expensive to produce. The key for Qatar in the long run is to ensure it maintains market share by adapting rapidly to changing market dynamics,” said Standard Chartered bank in its latest report ‘Global Focus’, reported Gulf Times newspaper.

The bank sees little impact in the near-term impact on Qatar’s fiscal receipts from LNG sales. In the long run, however, Qatar’s ‘sweet spot’ for pricing LNG is likely to tighten further, the report stated. Qatar has signed long-term contracts with Asian buyers over the past three years, locking in prices at attractive crude-indexed levels.

“Qatar’s LNG sector faces pressure on prices for Asian buyers as a result of the slump in oil prices,” Gulf Times quoted Standard Chartered as saying.

LNG prices in Asia are currently below $10 per mn British thermal units (mBtu) as new supply from the US and Australia comes online, the newspaper said.

“Asia accounts for almost 80% of Qatar’s LNG exports; while demand is likely to rise further, supported by lower prices, Qatar’s ability to maintain its pricing advantage will be challenged as these markets benefit from new supply sources and lower prices,” the report said.