In April, Doha overtook the United States in terms of volumes exported, re-establishing itself as the global leader in the sector

Qatar regains its leadership in the liquefied natural gas sector

photo_camera AFP/ KARIM JAAFAR - Ras Laffan Industrial City, Qatar's main site for the production of liquefied natural gas and gas-to-liquids, managed by Qatar Petroleum, about 80 kilometres north of the capital Doha.

Qatar has once again positioned itself as the global leader in the liquefied natural gas sector, with exports in April reaching 7.5 million tonnes, according to Bloomberg estimates. The emirate has thus overtaken the United States, another power in the sector that managed to position itself thanks to the use of fracking.

Liquefied natural gas is obtained by refrigerating natural gas, which increases its price, but also makes it easier to export by sea, as opposed to its gas version's reliance on pipelines. 

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According to CIA data, Doha has the third largest natural gas reserves in the world. However, its remoteness from Asian and European markets, from which it is separated by highly geopolitically volatile countries, has meant that Qatar has made a strong commitment to liquefied natural gas for export, making it a major power in the sector, with annual exports of some 77.1 million tonnes, according to the International Gas Union.

However, it is increasingly facing competition from other countries that, for similar reasons, have also invested in the sector, mainly the US and Australia, which have even managed to overtake Doha.

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Fracking, a technique that makes it possible to extract shale gas located between layers of rock by injecting water with chemical additives and sand at high pressure, has allowed Washington to go from being a net importer of natural gas to one of the main exporting powers and a direct competitor of Doha, even taking away its leadership in export volumes.

However, after a winter of high demand due to cold temperatures in the northern hemisphere, as well as increased European purchases to lessen its dependence on Russian natural gas following the invasion of Ukraine, reduced production at several natural gas terminals in the United States due to maintenance has allowed Doha to once again overtake Washington, Bloomberg notes.

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Qatar also has medium-term plans to further increase its liquefied natural gas production, reaching 126 million tonnes by 2027, according to plans announced by Emir Tamim bin Hamad al-Thani earlier this year.

Traditionally, the main market for Qatari gas is Asia, where approximately 80% of its exports go, with South Korea, Japan, India and China standing out. The latter has also become one of Doha's main targets, due to its great appetite for energy commodities, of which it is the largest importer internationally, and could potentially become one of the main markets for Qatari gas.

However, Russia's invasion of Ukraine has greatly increased demand from EU countries eager to rapidly reduce their gas dependence on Moscow, from whom they obtained up to 40% of their total natural gas imports in 2021, a figure that increases dramatically in the case of countries such as Germany, Italy, Austria and Hungary. 

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European Commission President Ursula von der Leyen has already announced her readiness to push ahead with a plan to reduce Russian gas imports by up to two-thirds by the end of 2022 and a total blockade by 2027, for which she will need to find new suppliers.

The US has been quick to position itself as an alternative to Russian gas, promising to increase its exports to EU countries by up to 66%, but Qatar can also get a piece of the European pie and help reduce dependence on Russian gas.

Although Qatar's preference for long-term contracts, as opposed to an EU that favours shorter-term deals, and focus on the Asian market make it difficult for the Gulf state to turn quickly towards Europe, Doha can still accompany European diversification efforts. Already in 2021 it contributed up to 24% of liquefied natural gas imports from the EU and the UK, according to Cedigaz figures, but Doha has greater potential.

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For Justin Alexander, director of Khalij Economics, Qatar's planned production increase could see the Emirate play "a pivotal role in diversifying European gas imports away from Russia". Thus, the conjuncture generated by the invasion of Ukraine could lead to "a series of long-term supply agreements this year for both existing and future [Qatari] gas production", Alexander continues.

The first to do so has been Germany, Russia's main energy partner, which since the invasion has sought to replace its imports of Russian energy commodities, signing an agreement with Doha in March to foster a long-term energy partnership.

Doha would thus complement its position in the Asian market by strengthening its presence in Europe, aiming to maintain the current trend and consolidate its position as the world's leading exporter of liquefied natural gas.

Coordinator for the Americas: José Antonio Sierra. 

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