1. QNB Economics
economics@qnb.com.qa
07 December 2012
LNG Export Destinations are being Diversified
Qatar’s LNG boom has been phenomenal, according Spain (4.8m) and France (3.2m). Belgium imported
to a report from QNB Group. Through the 1990s and 6.1m tonnes in 2011, up from 2.8m in 2007, some of
2000s Qatar invested heavily in LNG production, with which was re-exported through recently-expanded
exports beginning in late 1996. Ten years later, Qatar storage facilities at Zeebrugge port, designed to
was the world’s largest exporter and in 2011 it support the development of an LNG spot market.
exported 76m tonnes of LNG, accounting for 31% of
the global market. The next largest exporter was According to QNB Group, Qatar is diversifying its
Malaysia with 24m, less than one-third of the tonnage. LNG export destinations. In 2007, Qatar exported to
eight different countries and in 2011 it exported to 23
In 2011, 47% of Qatar’s LNG exports went to the Asia different countries. In 2011, export destinations
Pacific region and 42% to Europe. Asia has been the included the Middle East (UAE and Kuwait) and
primary export destination for some time, and received South America (Argentina, Brazil and Chile). Exports
an even larger share in 2007 of 79%. This region is to Argentina are set to rise after the signing of an SPA
characterised by a shortage of hydrocarbon resources for 5m t/y starting in 2014. A new long-term SPA with
combined with rapidly rising demand for gas-fired Thailand is reported to have been signed and Qatar
power generation. The largest Asian destinations in recently made the first delivery of LNG to Singapore.
2011 were Japan (12m tonnes), India (10m) and South Jordan has expressed strong interest in importing
Korea (8m). LNG, and Qatar is helping it to build a regasification
terminal in Aqaba.
LNG Export Destinations (2011)
(tonnes) Total LNG capacity is 77m tonnes. However, slightly
Total = 76m less than this is usually exported owing to downtime
for maintenance and repairs. Most of Qatar’s
production goes towards meeting the long-term
North commitments of SPAs. In 2012, Qatar had SPA
America Europe contracts for around 55m tonnes, or 73% of its
32m Asia Pacific
5m production capacity. By 2014, SPA export
36m
Middle East commitments will increase to 64m tonnes, or 84% of
2m
total production. These new contracts are mainly to
Asia Pacific and South America, meaning that
South America Europe’s share of Qatar LNG exports is likely to fall.
1m
Countries Qatar exported LNG to in 2011
The remaining production is exported on spot markets.
In 2011, there was a rapid increase in the amount of
Source: BP and QNB Group analysis Qatari LNG exports sold on the spot market to around
28% of production, up from 9% in 2010. This was
Europe’s share of Qatar’s LNG exports has increased owing to a combination of rising production in Qatar
significantly, mainly as the UK has had to replace and a redirection of exports away from the US (as its
declining gas production from its North Sea fields. The domestic gas supplies increased sharply) towards the
UK was the single largest importer of Qatari LNG in spot market. This was positive for Qatar as spot
2011. It has long-term sales and production market prices remained high and demand was robust.
agreements (SPAs) with Qatar for a total of 12m Demand from Japan was particularly strong as the
tonnes per year (t/y) and in 2011 purchased a further country shut down its nuclear power plants in the
4m tonnes of Qatari LNG on the spot market. aftermath of a tsunami and needed more LNG as an
alternative power source.
Other countries in Europe have also increased imports
from Qatar to lower dependence on Russian supplies, In the period from 2014-21, around 16% of production
and to reduce carbon emissions by using more, is not covered by existing SPAs and is potentially
relatively clean, natural gas. Notably, this has led to available to be sold on spot markets. It is likely that
increasing exports to Italy (6.1m tonnes in 2011), over time, new contracts will be signed to replace or
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2. QNB Economics
economics@qnb.com.qa
extend existing contracts as their terms expire. A Asia Pacific and rising LNG prices will continue to
number of potential SPAs are currently under support Qatar’s LNG export revenue despite the lack
discussion, reportedly with India, Pakistan and Turkey. of new projects to increase capacity.
According to QNB Group, this should keep the
proportion of production sold on spot markets at
around 16% or lower.
LNG SPAs and Spot-Market Exports (2005-40)
(Tonnes)
Implied spot market deliveries
Assumed new/extended SPAs
Total SPAs
76 76 76 76 76 76
16%
56
64 64 64 84%
22 57
53 50
35 35
29
19 Forecast/ Planned
4 0
2005
2008
2011
2014
2017
2020
2023
2026
2029
2032
2035
2038
2040
Source: GIIGNL, Qatargas, Rasgas and QNB Group analysis
The terms of the SPAs are not public but they are
generally long-term agreements that are linked to oil-
or gas-price benchmarks. Based on available volume
and revenue export data, Qatar’s average sales price of
LNG rose by 35% in 2011 from US$9/m British
thermal units (mBtu) to US$12/mBtu. This increase
was in line with the benchmark Japanese LNG import
price index, which also rose by 35%.
So far this year, Japanese LNG prices have averaged
16% higher than last year at US$17/m btu. Gas prices
in Europe have been more restrained, only rising by
8% on average, to US$11/m btu. Prices have been held
back in Europe as growth has been weaker than in the
Asia Pacific.
This provides a price incentive for spot market
deliveries to be exported to the Asia Pacific, in
addition to the rising number of long-term SPAs being
signed with countries in the region. According to QNB
Group, the combination of increasing deliveries to
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3. QNB Economics
economics@qnb.com.qa
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