Qatar Energy starts Ras Laffan LNG expansion

State-owned Qatar Energy, formerly known as QP, has begun construction of four LNG trains at the 77mn t/yr Ras Laffan export facility, putting the company on track to achieve their target of increasing production capacity to 110mn t/yr by 2025.

The four new trains have a combined capacity of 32mn t/yr, exporting gas from Qatar's North Field expansion project. Development drilling for the first phase of this project began in April 2020. Qatar Energy has plans for a second phase of expansion to further boost output to 126mn t/yr by 2027, but has not ruled out the possibility of increasing capacity beyond 2027.

While 76.15mn t/yr out of 77mn t/yr of Ras Laffan production is contracted under long-term deals, some agreements that the firm has signed with customers have substantial volume flexibility. This expansion will allow Qatar Energy to better supply their long-term customers, especially with the recent rally in spot LNG prices.

Much of the increase was chalked up to continued low underground gas storage levels in Europe ahead of the heating season, but there was some potential emerging interest from Asian buyers on expectations that a colder winter could lend further support to prices.

The rally in spot prices should increase interest among buyers to sign more long-term contracts in 2022 as a buffer against increased market volatility and to guard against high prices, market participants said.

Qatar Energy recently signed a long-term agreement with China's state-controlled CNOOC to supply them with 3.5mn t/yr of LNG over 15 years, starting in January 2022.

By Rou Urn Lee