QATAR proactive in dealing with new LNG challenges

With Qatar estimated to generate close to $50bn of annual savings until 2017, supporting expansive fiscal budgets over the next couple of years is unlikely to be a challenge, StanChart has said in a report.

Qatar has managed to negotiate contracts with many key markets in Asia, selling LNG at comfortable levels of up to $16 per million British thermal unit amid the shale gas revolution shaking up markets in North America and demand challenges in Europe.

“Over the medium term, Qatar’s prospects for LNG are fundamentally sound,” the report said.

Qatar has been very proactive in dealing with LNG challenges so far. With the shale gas revolution shaking up markets in North America and demand challenges out of Europe, Qatar has managed to negotiate contracts with many key markets in Asia, selling its LNG at comfortable levels of up to $16 per million British thermal unit.

“Qatari authorities are aware of challenges posed by Australia’s long-term LNG development targets – Australia could produce almost 80mn tonnes of LNG by 2020 if development plans proceed – and are considering developing the country’s petrochemical sector, which is heavily dependent on gas.

Liquefied natural gas played a crucial role in Qatar’s rapid economic growth during the past decade. But now, growth in the non-hydrocarbon sectors should be the key driver of the economy.

There are three key themes for the year ahead in Qatar, the report said.

First, spending related to the FIFA 2022 World Cup will need to increase this year, following lower-than-expected expenditure in 2012.

Second, inflation is beginning to climb, and as projects related to Qatar’s decade-long project pipeline begin to materialise, policy makers will need to address inflation before it becomes an issue.

Finally, while not the key growth driver, the LNG sector remains a pillar of the economy, and the key revenue generator. Thus the authorities are taking steps to address the long-term challenges facing this sector.

Source: Caye Global News, Gulf Times

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