Qatar May Find More Value in U.S. LNG Projects, Woodmac Says

Qatar, the world’s largest producer of liquefied natural gas, may find investing in U.S. supply to be more profitable than expanding existing facilities, according to Wood Mackenzie Ltd.

Qatar Petroleum International and Exxon Mobil Corp. may send LNG from the Golden Pass facility in Texas on the U.S. Gulf Coast to the U.K., Wood Mackenzie said in an e-mailed statement yesterday. That would free up supplies from Qatar to be shipped to Asia, the Edinburgh-based consultant said.

Qatar Petroleum, the country’s state-owned oil company, holds excess LNG shipping capacity and space at the U.K. South Hook receiving terminal, said Wood Mackenzie. That may provide a cost advantage of as much as $1.50 per million British thermal units over other proposed U.S. export projects for European supply, according to the report.

“A Golden Pass liquefaction project could offer advantages over some other proposed U.S. LNG projects, including lower development costs and less financing challenges,” Noel Tomnay, a Wood Mackenzie gas consultant, said in the statement.

The Golden Pass terminal got approval Sept. 27 to export LNG to countries with which the U.S. has free trade agreements, according to data from the Department of Energy’s website. The facility’s owners submitted an application on Oct. 26 to ship gas to countries such as Japan, China and India that have no free trade agreements with the U.S.

“The bolstering of Europe’s, and specifically the U.K.’s, energy security of supply through the facilitation of LNG exports from the U.S., combined with Qatari energy investment in North America, would strengthen Qatar’s geopolitical hand,” Tomnay said.

No Guarantee

There is “no guarantee” the Golden Pass facility will obtain the approvals for liquefaction development and LNG exports, Wood Mackenzie said.

The project may benefit from proposed legislation seeking to increase gas exports to North Atlantic Treaty Organization countries, and a free trade agreement being negotiated by the U.S. and the European Union, according to the report.

“A successful conclusion to either of these initiatives could enable Golden Pass LNG exports to the U.K.,” Tomnay said.

The Golden Pass terminal has an import capacity of 2 billion cubic feet a day, according to its website. Qatargas has three contracts to export a combined 8.1 million metric tons of LNG to the U.K. annually.

Before it's here, it's on the Bloomberg Terminal.