(MENAFN- The Peninsula) Joel Johnson |The Peninsula
Doha, Qatar: Qatar seeks to expand its LNG sales and production capacity by signing agreements and after having partnered with several countries and entities this year.
According to a report by Fitch Solutions, Asian countries including China and India creates significant opportunities for the country to expand its sales and production capacity.
QatarEnergy's equity share sale to Sinopec and PetroChina in the NFE and NFS projects remarks its long-term strategy to penetrate China's booming industry.
China-domiciled firms have inked contracts to import of close to 8 mtpa from the NFE and NFS projects.
However, these contracts highlight's Qatar's reselient LNG exports to China, which is estimated to surge by 25 mtpa within the next two years. This represents roughly 32 percent of the country's current LNG production capacity.
The reprot noted“Besides contracted volumes, Sinopec and PetroChina could lift an additional 0.8 mtpa of equity volumes, either for exports to China or for trading in international markets.”
On the long-run, China will remain integral to Qatar's LNG development strategy, as demand-side fundamentals in the Asian region's natural gas market remain strong, bolstered by coal-to-gas fuel switching policies and expanding city gas networks.
On the other hand, India provides another major market for Qatar, as reports claim that it's appetite for LNG is extending swiftly. Qatar and India's energy ties stand robust, having signed a Sales and Purchase Agreement (SPA) with Petronet LNG in 1999. However, as compared with China's market, Qatar-India LNG trade lags far behind.
This year, Qatar renewed an SPA with India's petronet LNG to supply about 7.5mpta of LNG starting this month. However, China remains the top payer in Qatar's LNG business.
“Qatar's LNG trade with India has not been growing rapidly, but India has incentives to import LNG from Qatar, given its geographic proximity and lower shipping costs. Unlike China, Indian companies are not party to Qatari LNG projects and are unlikely to secure long-term SPAs, limiting the potential growth in LNG trade between the two countries,” the report says.
Meanwhile, India has been keenly anticipating US LNG as an alternative source of supply, but Indian consumers are more likely to import contracted LNG from Qatar, given the geographic proximity and affordable shipping costs.
Fitch Solutions further stated:“The large-scale expansion of India's LNG import capacity, which is set to rise to around 65 mtpa (88 bcm), could further support Qatar-LNG trade growth. Compared to Europe and China, India will remain a smaller LNG market for Qatar.”
On the other hand, competition between Qatar and the US in Europe's LNG sector is expected to“heat up” as Qatar aims to secure long-terms LNG SPAs with customers in the European region.“LNG cargoes are expected to be delivered to Shell's Gate LNG terminal in the port of Rotterdam and TotalEnergies' Fos Cavaou LNG receiving terminal in southern France. Based on current export and new supply agreements, Qatar's contracted LNG exports to Europe could rise from 18.7 mtpa in 2023 to 28 mtpa in 2026, closing the gap with US exports. Additional LNG exports to Europe could come from Eni's equity LNG from the NFE project, in which Eni holds a 3.12 percent stake, equivalent to 1.0 mtpa of LNG production,” it added.
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