Overview

Qatar holds the world’s third-largest gas reserves after Iran and Russia, with an estimated 24.7 trillion cubic metres. Production in 2013 amounted to 158.5 billion cubic metres, according to the BP Statistical Review of World Energy 2014, ensuring the country can comfortably meet its increasing domestic needs and rising export commitments.

The tiny Gulf state is still the world’s largest LNG supplier, with a production capacity of 77 mtpa – a quarter of the global LNG supply – although it is forecast to be overtaken by Australia by 2020. Doha has no plans to build more LNG trains beyond the 14 already in operation, as the country’s strategy is to maintain the value of its existing LNG capacity and contracts by constraining the available supply.

Qatar’s government called a moratorium on gas production projects at the North Dome field in 2005 while it conducted an extensive analysis of the reservoir structure. No date has been set for when the ban will be lifted, although it looks likely to be 2018 at the earliest.

There remains the possibility that the ban could be lifted in response to Qatar’s increasing demand for electricity, which is forecast to rise by 8-11% a year until 2016. This could accelerate as the country prepares to host the 2022 World Cup to meet the power, air-conditioning and desalination demands of the influx of labourers and tourists.

Domestic gas demand is expected to double, rising by 20 bcm over the next eight years to more than 42 bcm. According to Qatar National Bank forecasts, domestic users will account for 30% of gas production in 2015, compared with just 16% in 2012.

However, production at the Barzan gas field – the last project to be sanctioned before the moratorium – is anticipated to reach 42 million cubic metres per day (MMcm/d) when it comes onstream in 2015, which could be enough to cover the increased demand.

In the meantime, Qatar is focusing on its non-North Field gas projects. This includes discoveries in the Khuff formation – where North Field is located – such as Block 4 North, discovered by Germany’s Wintershall, and QP, which should produce 20 MMcm/d when it comes online in 2016. Shell, PetroChina, JX Nippon and Total are also drilling deeper pre-Khuff formations.

However, the government may need to raise prices above the current $4/MMBtu to spur more investment in the complex geology of the pre-Khuff. This looks unlikely as Doha needs cheap supplies to fuel its downstream strategy of diversification into petrochemicals and GTL.

Pipeline gas supplies to Qatar’s neighbours are minimal, with the 20.6 bcm/y Dolphin venture – which supplies the United Arab Emirates and Oman – the only cross-border pipeline project. The UAE has expressed an interest in increasing Qatari imports and is investing in expanding the capacity of the pipeline. However, pricing remains a sticking point in negotiations.

Qatar has started negotiating small LNG deals with its neighbours, however. For example, Kuwait Petroleum Co. signed an LNG import contract with Qatargas in April to cover the country’s energy demand for the rest of 2014.

Page updated: 08/09/2014