Gas cartel not feasible
Expert tells an overview of Qatar gas market
Posted: 19 February 2007
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An Opec-type body is not feasible for gas producers because oil and gas are two different commodities and cannot have the same price mechanism, an energy expert said.
While oil is very much a global commodity and has a uniform price, gas is still a regional product with price differeing from each region,” Andy Flower, an international consultant and a former senior executive at BP, said.
He said about 60% of the global oil production was traded in the international market and about 93% of the gas production still reached customers through pipelines. Only 7% of the gas production is sent as LNG.
“Because oil is traded in the international market there is a mechanism that ensures its price is essentially the same the world over. Whereas gas prices are determined by sale and purchase agreements between the producer and the consumer,” he said, in a Qatar-gas sponsored workshop for journalists last month.
He said global demand for LNG is set to reach 250 million tonnes by 2011, 60% up from last year’s 159 million. “Between now and 2011, about 90 million tonnes of additional LNG capacity will be needed world-wide. More than half of this will come from Qatar itself.”
Last year, Qatar accounted for 16% share by the global LNG production and by 2011, this is expected to climb 28%.
Other than Qatar , he said, Nigeria , Australia , Russia and Iran would be adding more liquefaction capacities. Nigeria has already planned 59.8 million tonnes, Australia 59 million, Russia 19.8 million and Iran 3805 million tonnes.
In 1997, Qatari gas reached only two markets – Japan and Spain . In 2001, it reached the US , France and South Korea .
Last year, the major markets for Qatari gas were Japan , South Korea , Taiwan , India , Spain , Italy , France , Belgium , the UK and Mexico .
Although Qatar ’s North Field was discovered by Shell in 1971, it took another 10 years before the then Qatar General Petroleum Corporation could formally announce Qatar ’s first LNG project.
On Qatar ’s LNG shipping industry, he said, Qatargas and Rasgas have some 23 ships on long term charter with a combined capacity of 3.1 million cubic metres or 11.2% of the World LNG capacity.
In addition, buyers have some 12 ships dedicated to lift LNG from Qatar under FOB contracts. Flower said Qatar had placed for 39 LNG tankers and orders for a further nine tankers were expected to be confirmed soon.
By 2010, the Qatari fleet would comprise 73 tankers with a combined capacity of 13.9 million cubic metre or 28% of the world fleet capacity.
Buyers with FOB deals with Qatar would need some 18 LNG ships making a total of over 90 ships regularly using Ras Laffan Port , Flower added. |
