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e other sources cited by the news service con rmed a delay until at least the middle of the year. ey attributed this to the fact that increas- ing the scope of the expansion project, coupled with a lower LNG price outlook, a ected “every aspect” of the potential partnerships involved.
“ e conversation is centred on the valuation of the project, which a ects equity and nanc- ing,”oneofthesourceswasquotedassaying.
“Qatar’s cost base is very low compared to other projects but in today’s environment, every project has to compete for capital,” said another.
What next?
QP has not yet said how much it would cost to build the six liquefaction trains and related infrastructure that would be required for its expansion plans. With one 8mn tpy train costing around $10bn, it has been estimated that an investment of at least $60bn would be required.
However, there are concerns that the weaker price outlook has led IOCs to lower their pro- jections for the rate of return on the expansion project, according to three of Reuters’ sources. It may therefore not be surprising if one or more of the interested parties decides to back out,
especially if LNG prices continue falling.
And indeed, current price trends show no immediate sign of reversing, with demand look- ing likely to remain weak as China continues to battle the coronavirus outbreak, while a mild Northern Hemisphere winter is doing nothing to encourage the use of more LNG. On the sup- ply side, meanwhile, a new wave of liquefaction capacitybeingdevelopedgloballyisintensifying
worries about oversupply continuing. Speculation has already been growing about which new liquefaction projects will su er as a result of the increasingly crowded market. From the comments reported by Reuters, it appears likely that Qatar’s LNG plans could be among
these.
Qatar has previously expressed a willingness
to go it alone with its North Field expansion if necessary. However, sharing the costs and risks with partners – who could also provide access to more customers – is a more appealing option. Either way, Qatar is predicted to be among the countries that will drive LNG production and export capacity growth over the coming decades. But now there are additional questions about how economically attractive its plans will be to foreign partners.
Sharing the costs and risks of the expansion with partners could also provide QP with access to more customers.
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