US to overtake Qatar as top LNG supplier by 2032: report

QatarEnergy recently joined a group of oil and gas companies in an effort to diminish nearly all methane footprint produced during operations by the year 2030.

The United State is likely to supersede Qatar as the world’s top supplier of liquified natural gas (LNG), an analyst suggested, as the Gulf state undertakes a mass expansion of its LNG production.

The major growth areas for the United States’ LNG sector will be in Europe, Northeast Asia- especially China, and Southeast Asia, an analyst for broker, Poten & Partners’, said.

Poten pegs the US’ overall market for LNG shipments at 400 million tonnes annually (mta) in 2022, with an expansion of up to 550 mta in 2032.

“China alone is expected to account for nearly 40 mta of the incremental growth- as LNG is substituted for coal, the US Department of Energy’s (DOE) Energy Information Agency’s (EIA) mid-year report detailed.

“India is expected to account for almost 25 mta of this increase. The US is likely to continue its front-runner status, with Poten saying that much of the new contracting for LNG sales, some with timeframes extending out 20+ years, is tied to US origins,” it added.

Over the next decade Poten predicts the largest portion of supply growth coming from the US and Qatar “with the two countries forecast to account for around 100 mta of 200 mta in supply growth” between the years 2022 and 2032.

Of this, supply from the US would increase by around 60 mta and Qatar by around 42 mta tonnes year by 2032 with the US expected to overtake Qatar as the world’s largest supplier of LNG.

“I think there could be some flexibility in that some US projects don’t get approved and more comes on in Qatar, but overall that’s about 100m tonnes of the 200m tonnes of increase in supply,” said the analyst.

Estimates for European demand for LNG are expected to rise dramatically due to the events in Ukraine, as European countries look to reduce their dependence on Russia.

Poten’s forecasters have increased their views of European imports of US LNG from around 85 mta in the mid/ late 2020’s up to 110 mta, “with some 18 mta – more than half of this growth, tied to consumption in Germany, predominantly, and Poland.”

US’ LNG exports surged by 12% in the first half of this year, reaching an average of 11.2bn cubic feet per day (Bcf/d) against the backdrop of the second half of 2021, the report said.

The report further outlined the total LNG exported by the US during the first five months of 2022, prior to the fire at a Freeport LNG facility in early June, which is expected to minimise export volumes “for several months going forward.”

The EIA said that deliveries to the United Kingdom and European Union mounted to 8.2 Bcf/d, constituting 71% of total exports.

Meanwhile, a fire that struck the Freeport LNG liquefaction plant on Quintana Island, Texas last month has resulted in the downsizing of US export capacity by an estimated 2 Bcf/d

In May, the Freeport facility loaded 20 vessels.

Europe moving away from Russian gas

The surge in energy prices over the past two years has been the largest since the 1973 oil crisis, the World Bank said.

Oil prices will remain above $100 a barrel so long as the Russian-Ukrainian conflict escalates even further, an Economist Intelligence Unit global outlook report said. The existing energy inflation further exacerbated by the conflict has caused oil prices to near a 100% gain, the highest level since 2008.

With energy security becoming a looming international concern in recent months as the conflict persists between Moscow and Kyiv, European countries have introduced a series of sanctions targeting individuals, banks, businesses and major state-owned enterprises, and exports, among others.

The United States has banned all Russian oil and gas imports, while the UK will phase out Moscow oil imports by the end of this year.

As for Germany, it has paused plans for the opening of the offshore Nord Stream 2 gas pipeline from Russia, which runs under the Baltic Sea connected from Russia to Germany.

The EU also said it aims to terminate Russian coal imports by August 2022.

Qatar’s fast growing economy

Despite the analysts comments, Qatar’s economy is projected to experience an expansion this year while attaining the position of being the fastest growing economy in the Gulf Cooperation Council (GCC) in the years 2023 and 2024, according to the World Bank.

The country’s real Gross Domestic Product (GDP) is expected to increase by 4.9% this year, followed by a 4.5% growth in 2023 and 4.4% rise in year 2024 respectively, the World Bank’s latest Global Economic Prospects report for June revealed.

Qatar’s GDP growth is due to its boosted hydrocarbon exports of 10% as well as its multi-billion plan North Field expansion project, which is the largest of its kind seeking to boost Qatar’s annual liquified natural gas production capacity from 77 million metric tonnes to 126 million tonnes by the year 2027.

The World Bank reported Qatar’s 2022 GDP growth of 4.9% against a backdrop of slow global GDP increase of 2.9%.

The output in the Middle East and North Africa (MENA) region is expected to enlarge by 5.3% in 2022, which is 0.9% more than the previous January forecast, partially due to higher oil prices which in turn bears rising oil revenues, as well as improved prospects among the GCC economies.

This would be the region’s fastest growth in a decade.

The rebound however could have experienced more robustness had it not been for the “detrimental” impact of Moscow’s invasion of Ukraine on global oil importers.

The global energy insecurity and higher commodity prices due to the Covid-19 pandemic-induced slow down, followed by the Russian invasion of Ukraine, played a major role in decelerating global growth. However, the impact on the region is divergent.

The unforeseen economic ramifications unravelled by the Russian-Ukrainian War onto the world has particularly had a ‘positive’ effect on Qatar’s economy.

“The effects of the war in Ukraine on the commodity markets and of its associated economic sanctions are positive, on balance, for Qatar’s economy, the largest exporter of Liquid Natural Gas in the world,” the World Bank’s GCC Economic Update report stated.

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