Qatari CEO Calls Expansion Plan "Conservative"
Qatar Petroleum’s CEO has told an event in London October 9 that, if anything, its announced expansion plan is “conservative.”
Speaking on day 1 of the Oil & Money conference, the QP CEO Saad Sherida Al-Kaabi told delegates “our expansion plan is conservative… We could overshoot by a little bit.”
Fifteen months ago QP said it would increase LNG production by some 30% by 2025 to reach 100mn metric tons/yr, from its current nameplate capacity of 77mn mt/yr. But last month it surprised many when it announced an upward revision of that increase to 43% and an eventual plateau of 110mn mt/yr, including a fourth LNG train as part of its expansion project. He told his London audience that QP's announced plans were “all methodical and studied.”
Although no oil major partners have been announced for any of the expansion trains, QP will have no shortage of investors for these because Qatari production costs are among the lowest in the world. Rystad Energy head of gas markets Carlos Torres Diaz told an October 4 event in London that Qatar can break even into the Asian market at a landed price of $5.60/mn Btu – lower than any analogous North American LNG export project targeting the Asian market.
Al-Kaabi also said that the planned expansion can be funded entirely off QP's own balance sheet, and therefore is not dependent on offtake contracts. So we need to get something back from investors in exchange for their participation, he added. The preferred model is with partners and it was "unlikely but possible" that QP could develop the new capacity alone.
He declined to talk about what type of equity partners QP was seeking, adding that everything was on the table - a reference that they could include buyers, as well as existing LNG suppliers.
All of Qatar's existing equity partners in its LNG export trains are suppliers - with ExxonMobil being the most closely involved, followed by Total, Shell and ConocoPhillips.
Al-Kaabi spent much of last week on visits to significant Qatari LNG markets, notably South Korea (October 1) and Japan (October 2-3) where he also met trade/energy ministers.