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Wednesday, May 1, 2024 22:42 GMT
Dr. Yury Sentyurin, the Secretary-General of Gas Exporting Countries Forum (GECF) has said that Qatar’s LNG expansion program, which aims to increase LNG output by nearly 64% over the next seven years, will not be affected by the current volatility in the global gas market.The Secretary-General of the Doha-based Forum also noted that Qatar Petroleum enjoys significant cost competitive advantage compared to other gas producers, and by the time the post-moratorium volumes hit the market, gas demand in longer-term will be robust enough to accommodate additional supplies. “The Qatar expansion plans have been announced to keep going ahead as per the schedule.Based on the announced projects, Qatar will expand its capacity of LNG production to 110mpta by 2025 and 126mtpa by 2027. By the time these projects are expected to come online, the impact of COVID-19 is likely have been recovered. Definitely, a delay in improving demand will come to play in the market. Still, it will only be a time delay and the market will still need LNG to meet the demand in longer-term,” Dr Sentyurin told The Peninsula in an exclusive interview.He added: “Based on the benefits Qatar enjoys due to the lower cost of the production from the mammoth North Field and other planned measures at Qatar Petroleum such as a 30% cost reduction, we think these projects can easily be accommodated into the market.” Commenting about the impact of the coronavirus pandemic on future gas development projects and FIDs (Final Investment Decisions) in other countries, he noted that the global gas markets, currently, are experiencing increasing complexity. COVID-19 has amplified the level of uncertainty about the competitiveness of the new projects.The unfortunate pandemic has exacerbated the risks that were already in place, created by the over-supply markets, a mild winter, and low-level prices. “Although LNG demand has fallen in almost all of the European markets by an average of 10% y-o-y, there are some other markets such as China, where LNG trade is progressing well. Nevertheless, the pace of the increment is less than what was previously projected,” said the Secretary-General.He also mentioned about the some of the LNG developers who have announced delays in the construction of their planned projects such as Woodfibre LNG project and LNG Canada “The withdrawal of some giant names such as the Royal Dutch Shell from Lake Charles II and pushing back of some FIDs that were supposed to be kicked-off in 2020, such as the Mozambique Rovuma project, are other examples.So delays in supply projects are likely to materialize in the short-term. The rate of recovery in the post-COVID-19 era will be the most critical factor enabling commercial projects to revitalize. Further, delays in some developing supplies are likely to happen for a couple of years, but the rate of recovery is the main factor to set them back on stream,” he said.Dr Sentyurin, a former Russian diplomat and minister, also noted that even though the low prices of oil and gas affect the feasibility of all upstream projects across the globe, the projects with a higher cost curve are encountering higher level of delays or cancelations. “Generally, the average breakeven price of natural gas production in GECF Member Countries is lower than other producing countries.Therefore GECF Member Countries will remain committed to ensure a resilient supply of natural gas for the consumers in the current market condition.”On rebounding and stabilization of oil and gas prices, he said that predicting the price movement is also rather challenging, as there are different views on oil prices. “Oil prices have actually been rebounding from the low of US$20/bbl and ICE Brent currently trades at above US$40/bbl. This increase comes amidst the gradual reopening of several economies and the accompanying relaxation of COVID-19 related restrictions.Summer usually fares strongly in transportation fuels demand and the relaxation of COVID-19 restrictions – coupled with a change in consumer behavior in favor of road transportation fuels, which has seen a shift from air to road transportation – could spur oil demand. At the same time, the initial phase of the Opec+ supply adjustment has been extended, which could lend support to rebalancing supply and demand,” he added.“Currently, the Opec+ supply adjustment extends to 2022. In this analysis, it is important to underline that many of the shale producers in the U.S. breakeven at an oil price of around US$50/bbl, which translates to additional supplies whenever prices move pass this threshold. In this context, it can be concluded that oil prices might have less difficulty marching past the US$50/bbl mark than passing the US$60/bbl mark, which has also been the level at which oil prices oscillated prior to the coronavirus pandemic.Furthermore, there are many wildcards, which could have a marked effect, including the developments around the coronavirus - further virus waves in autumn and winter and the development of vaccine, political uncertainties - the US elections in November and Brexit, and economic uncertainties - sovereign debt defaults in places such as Argentina and a rise in unemployment, to mention a few.” He also said that the rebound in gas prices will be largely dependent on the economic recovery of consuming countries which in turn depends on the success of lifting the lockdown measures. Thus far, easing of lockdown measures in China and India have seen some stimulation of gas demand as industrial and manufacturing activity scales back up to capacity.