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Qatar’s quest to becoming the world’s most secure gas energy source
Energy security and liquified natural gas (LNG) have dominated headlines over the last year. Among the discussions stands a large, yet geographically small, player — Qatar.
The Gulf state has been at the centre of energy discussions, particularly during the onset of Russia’s invasion of Ukraine, as Europe scrambled to seek an alternative to its heavy dependence on Moscow’s gas.
The demand for energy reflected well on Qatar’s oil and gas sector, with state-owned QatarEnergy recording a net profit of $42.47 billion (QAR 154.6 billion), representing a 58% year-on-year increase.
“Qatar managed to increase production slightly last year in order to help meet increased global demand for LNG following the reduction of Russian pipeline exports to Europe, underlining its role as a secure source,” Jamie Ingram, Senior Editor at Middle East Economic Survey (MEE), told Doha News.
Since the early detection of its gas resources, energy has evolved into a potent instrument of Qatar’s soft diplomacy, propelling the nation towards achieving global production dominance.
Rise to prominence
In 1971, Qatar entered the realm of natural gas by making its inaugural non-associated gas discovery off the north-east coast, eventually establishing what is currently recognised as the North Field. This would mark a pivotal moment for the Gulf state.
The gas-rich area, which Qatar shares with Iran, carries more than 900 trillion standard cubic feet of gas reserves and represents 20% of the world’s proven reserves. Qatar’s proven reserves witnessed a steady increase over the years, jumping from 2,265 billion cubic meters in 1981 to 8,500 billion cubic meters in 1996.
It was not until the late 1990s when the country made its first sale and purchase agreement with Japan’s Chubu Electric for 4 tonnes of LNG per annum, marking the beginning of a decades-long gas industry friendship between Tokyo and Doha.
Prior to the discovery of gas, oil was the primary driver of Qatar’s wealth until it became clear to the country that natural gas is the future. Qatar had utilised the years of low oil demand, especially during the 2007 global financial crisis, as an opportunity to grow its use of LNG.
The Gulf state recorded a major milestone in 2010 when its production of LNG reached 77 mtpa (million tonnes per annum), climbing up the industry ladder to become the world’s largest LNG producer.
Despite having already topped the global LNG race, Qatar has continued to increase its annual LNG production, promising to reach 126 mtpa by 2027 through the North Field Expansion project—the largest of its kind on a global scale.
Qatar’s announcement of the North Field campaign came at a critical time in its economy in 2017, during which the Gulf state found itself grappling with an unexpected embargo was led by its neighbours—Saudi Arabia, the United Arab Emirates, Bahrain and Egypt.
More than a year into the rift, by 2019, Qatar made the surprising decision of exiting the Organisation of the Petroleum Exporting Countries (OPEC), which Saudi Arabia and the UAE hold major influence in.
Qatar’s energy minister Saad Sherida Al Kaabi said at the time that the country wanted to shift its focus towards natural gas, a move that has since solidified its position in the LNG world.
Four years after its withdrawal from OPEC, Qatar became the star of the show in the energy sector, with analysts pointing to the $30 billion North Field expansion project’s major role in turning the Gulf state into a reliable partner in the gas industry.
“Qatar’s decision to invest in expanding capacity helps reassure importers that it is committed to being a reliable supplier for decades to come. Countries such as China can continue to invest in expanding gas-fired power plant capacity safe in the knowledge that new supplies are coming onto the market,” Ingram said.
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