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MEOG PIPelInes & transPort MEOG
QP committed to LNG expansion drive, but slashes spending
Qatar
QATAR has reaffirmed its commitment to a massive expansion of its liquefaction capac- ity, despite the market currently reeling from oversupply.
However, its national gas company Qatar Petroleum aims to slash spending by 30% this year to cope with the collapse in oil and gas prices triggered by the coronavirus (COVId- 19) pandemic.
Qatar announced plans last year to raise its LNG production from 77mn tonnes per year currently to 126mn tpy by 2027, in two phases anticipated to cost more than $50bn.
Those plans remain on course, QP CEO Saad al-Kaabi said in a webcast on May 21, in spite of the crisis.
“The energy sector is very resilient and has been through many cycles, but this is different,” al-Kaabi, who also serves as Qatar’s energy min- ister, explained. demand will take one or two years to return to pre-pandemic levels, he said.
Nevertheless, Qatar is moving “full steam ahead” with the expansion, he said.
development drilling began in late March, as did the insulation of offshore wellhead jackets for the project. QP has also reserved capacity at a Chinese shipyard to build a fleet of LNG carriers for the expansion.
There have been some delays, however,
with al-Kaabi noting that the deadline for bids for onshore engineering, procurement and construction (EPC) contracts for the project had been moved to September. Earlier QP had set a deadline of April. Final awards will be announced by the end of the year.
“We are in it for the long haul. We are the most cost-effective producer and can withstand market shocks,” he said. “We are in very good financial shape and we are still looking for good investment opportunities.”
QP intends to cut its capital and operating expenditure by 30% in June, he said. But it will continue on its international acquisition drive, which has seen it snap up stakes in offshore exploration blocks across the world. Under its latest deal it acquired shares in two blocks off Cote d’Ivoire from France’s Total.
The global LNG market was contending with oversupply even before the COVId-19 pandemic began weighing down on demand. Some producers are to set to cut prices to protect market share, while others may be forced to shut down some production if they cannot compete.
Al-Kaabi said Qatar was not considering output cuts at this stage to help rebalance the market. And thanks to its low costs, there is no scenario where Qatar would be forced to take this step because of low prices, he said.™
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w w w . N E W S B A S E . c o m Week 21 27•May•2020