The US Shale Gas Revolution and Its Impact on Qatar's Position in Gas Markets

Lead PI: Bassam Fattouh, Howard Rogers, Peter Stewart

Unit Affiliation: Center on Global Energy Policy (CGEP)

March 2015 - Ongoing
Asia ; North America ; Qatar ; United States
Project Type: Research Outreach

DESCRIPTION: Today the Center on Global Energy Policy released a new study, "The US Shale Gas Revolution and its Impact on Qatar's Position in Gas Markets", that examines how Qatar may be impacted by major changes to the global LNG market, especially the development of US LNG exports, what those changes mean for Qatar’s revenues and the options it has to respond to new global competition. The study, a collaboration with the Oxford Energy Institute for Energy Studies, was co-authored by Bassam Fattouh, Howard Rogers and Peter Stewart.

OUTCOMES: Key Findings:
- Rising LNG supply volumes globally over the 2018–23 period, both from US LNG projects and elsewhere, as well as Russian response to rising competition and Chinese demand, create uncertainty about Qatar’s ability to maximize revenues by diverting volumes between Asia and Europe.
- The United States will be in a strong position to compete with Qatar to serve as a swing supplier between Asia and Europe/South America, as US LNG exports will not be destination-restricted.
- LNG exporters will face pressure to offer more flexible price indexation from US LNG exports, which offer volumes on a Henry Hub–related basis, rather than on an oil-based index, as Asian customers seek more diversified pricing structures.
- While these changes to the global LNG market will likely have an impact on Qatar’s revenues, its fiscal buffers and huge resource base allows it to adjust to challenges.
- Qatar will very likely remain the lowest-cost producer relative to greenfield project competitors, especially given that Qatar produces significant volumes of condensates and natural gas liquids (NGLs) associated with its natural gas production.
- Should Qatar decide to lift the moratorium on further North Field development, it may benefit from waiting through the 2018–23 “soft market” or by trying to intimidate competitors into deferring competing projects by announcing a firm intent to bring on new volumes as soon as possible once an announcement of the lifting of the moratorium is effected.