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Qatar And Russia Fight For LNG Supremacy
Qatar And Russia Fight For LNG Supremacy

Qatar Russia Will Fight Out LNG Supply While America Will Stand And Watch

As oil demand continues to dip due to the extended lockdown periods across the globe, it is time the nations depending on LPG also brace for impact. In America, companies with closer connections to the government are going to remain afloat for a little bit longer, while others are already preparing to file for bankruptcy.

Qatar and Russia are going to be on war footing soon, say economists. The double whammy of oil prices plummeting and coronavirus diminishing LNG demand is still in its relative nascency in Europe, according to Viktor Katona. However, demands will go up as more and more people are indoors and the use of LNG continues to come back to pre-corona virus figures.

Qatar has the advantage of low domestic competition, low production costs, and high inventories. The US will gradually slug its way back into competition, but it might not stand a chance to Qatar and Russia. The latter has been working towards a robust pipeline delivery, something the Donald Trump put sanctions against to curb the LNG expansion plan for Moscow.

But the coronavirus has changed situations dramatically. With oil prices hitting rock bottom and demand not coming up in the near future. Qatar has strategically been expanding its reach across the world. The virus outbreak did not stop it from declaring that from its annual production of 77 million tonnes, it plans to increase its output to 126 million tonnes by 2027. According to an official statement by Saad al-Kaabi, who heads the energy portfolio for Qatar, the Arab country would look at postponing the start of production from its new gas facilities until 2025. This could be justified over a delay in the bidding process. But the country has no intention of downsizing the world’s largest LNG project, the North Field expansion.

No wonder it has been seeking business in the UK, Benelux and Italian markets where Qatar Gas has enjoyed long-term commitments. It has, however, strategically been avoiding spot supplies to Spain and elsewhere, keeping itself clear from the most virus prone zones.

The simultaneous push of Qatar and Russia will leave very little space for American LNG – just as it reached a peak this February at 3.1 million LNG tons if things stand as they are April deliveries will fall by 50% from that all-time high.

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