New LNG plan gives Qatar US foothold

New LNG plan gives Qatar US foothold

 

Global LNG consumption is expected to grow to approximately 550 million metric tons per annum by 2030. Photo credit: Shutterstock.com.

Yet another megaproject driven by global demand for liquefied natural gas (LNG) has been announced for the US Gulf Coast, simultaneously demonstrating Qatar’s intent to pursue LNG investment diversification beyond the Middle East.

ExxonMobil and Qatar Petroleum confirmed this week that they will spend $10 billion adding liquefaction and export capacity to an existing import facility for handling LNG in Sabine Pass, Texas. Under a 30 percent (ExxonMobil):70 percent (Qatar Petroleum) joint venture (JV) called Golden Pass, the plant will be renovated to become an export facility, with construction beginning in the first quarter of 2019.

McDermott, an engineering, procurement and construction (EPC) company, will build the project with JV partners Chiyoda International and Zachry Group. The JV will be responsible for EPC and commissioning of three LNG trains with a final production capacity of approximately 16 million tons of LNG annually. The entire project is expected to be completed by 2024, according to McDermott.

Golden Pass will be supplied feedstock by the Gulf Run pipeline, according to an announcement from Enable Midstream Partners, the pipeline owner.

Burgeoning business

Sabine Pass, on the Texas-Louisiana border and four miles from the Gulf of Mexico, is also the location of Cheniere’s Sabine Pass LNG export terminal, one of three LNG export terminals now operating in the United States. A fourth, Cameron LNG on Louisiana’s Calcasieu River ship channel, recently received permission from the Federal Energy Regulatory Commission (FERC) to begin its start-up process and will begin exporting LNG this spring from the first of three production units, according to regional news reports. The Cameron LNG site was also originally built as an LNG import terminal but reconfigured into an export facility due to the US shale boom. FERC is also reviewing proposals for LNG export projects in Pascagoula, Mississippi; Jacksonville, Florida; and Brownsville, Texas.

Additionally, a $31.9 billion Canadian LNG export project was announced in late 2018. According to BBC News, this will be Canada’s largest private sector investment to date. The JV partners are Royal Dutch Shell, Petronas, Mitsubishi, Korea Gas, and PetroChina. Fluor and JGC are the EPCs.

By 2030, global LNG consumption is expected to grow to approximately 550 million metric tons per annum, according to a study from Royal Dutch Shell, as developing countries build out energy infrastructure and move away from higher-carbon energy sources, and as others diversify away from dependence on single or politically risky sources.

ExxonMobil said it plans to spend more than $50 billion through 2024 building and expanding US manufacturing facilities, while Qatar Petroleum plans to invest up to $20 billion in US oil and LNG projects in the near to mid-term, according to business magazine Forbes. The firm also plans to boost its domestic LNG production from 77 million metric tons per annum to 110 million metric tons per annum within the next few years. ExxonMobil and Qatar Petroleum have previously worked together on exploration and production projects in Argentina, Brazil, and Mozambique, according to ExxonMobil.

'More important than oil'

Qatar has been under an air-and-sea blockade from neighbors Saudi Arabia, the United Arab Emirates, Egypt, and Bahrain for a year and a half, and left OPEC in January after being a member since 1961. At the time, Qatari ministers said the country would be concentrating on natural gas production, far more important to the country’s economy than oil. Another motive may be that membership in OPEC could have triggered antitrust laws hamstringing Qatar’s efforts to invest in the US, according to the financial press.

Projects such as Golden Pass have contributed to a steady market for project cargo transport logistics on the US Gulf for the past several years. The shale-gas boom provides cheap feedstock for billions of dollars of investment in petrochemical manufacturing and LNG facilities on the Texas and Louisiana coasts, and most of the steel, manufactured pieces, material, and modules required to build these facilities and the pipelines that support them is imported.

Contact Janet Nodar at janet.nodar@ihsmarkit.com and follow her on Twitter: @janet_nodar.