DOHA: The Minister of Energy and Industry, H E Dr Mohammed bin Saleh Al Sada, has said the diversification strategy of Qatar’s energy sector is successfully going ahead in the changing global market
Until early 2010, Qatargas delivered LNG to only seven countries. This number had grown to 21 as of early 2013, he said in an interview published in the The Oil & Gas Year Qatar 2013, which was released here yesterday.
The minister noted Asia will remain the centre of interest for Qatar because of the region’s robust economic growth, geographical proximity in terms of global LNG trade and its demand for cleaner energy. Qatar also sees new Asian markets emerging, such as Indonesia and Malaysia.
Amid concerns over gas supply diversity and declining indigenous production, the European market potential is also growing. Turkey is one of those markets. Similarly, emerging Latin American economies are potential LNG markets as the continent’s own gas supplies lag behind rising demand. Qatar will continue to explore and consider all new LNG market opportunities.
On his expectations about the price of gas being reconciled in future Dr Al Sada said: “The gas trade is centred on three distinct regional markets-the US, Europe and Asia. Each has different pricing structure shaped by the degree of market maturity, sources of supply, dependence on imports and other geopolitical factors”.
“Looking at these markets, we see that the US has a gas-on-gas pricing system that the European market relies heavily on long-term contracts with price terms based on mix of competing fuels, while Asia uses crude oil as a benchmark for natural gas prices and long-term contracts. These differing gas price structures lead to significant cost disparities. It has always been Qatar’s aim to have price parity between gas and oil”.
Gas and LNG businesses generally rely on long-term contracts in order to provide certainty to the buyers and sellers and to justify the large scale investments required. “We believe that gas prices should remain linked to oil prices in Asia and Europe. This linkage results in both gas buyers and suppliers earning reasonable rates of return on their long-term investments,” the Minister said.
The LNG market is expected to tighten over the next few years, as little new supply will come online while demand will continue to grow, particularly from emerging markets.
On the expansion of Qatar’s downstream sectors Dr Al Sada noted Qatar’s long-term hydrocarbons development strategy is to open new opportunities for further development of the downstream sector. This would yield new intermediate and derivative products, creating various fresh opportunities in the areas of speciality chemicals, plastic adhesives, fibres, solvents, cosmetics, pharmaceuticals, plastics and industrial alloys.
In a separate interview, Ibrahim Ibrahim, Economic Advisor to the Emir, said Qatar is working on a report on energy saving strategies. “We are working through regulation. Electricity is free for consumers in the country…. We could try to impose some tariffs, reasonable ones…”.
“In any case, any subsidy removal must be gradual. We have to make sure it is consistent with people’s incomes. We would need to implement stiff regulations on building codes and assets using electricity and adopt other saving measures such as cutting leaks of desalinated water and water saving projects in agriculture”.
“The Oil & Gas Year Qatar 2013” was launched at a high-profile function attended by Qatar’s energy industry leaders.