Sheikh Khalid Bin Khalifa Bin Jassim Al-Thani is the Chief Executive Officer of Qatargas. He was appointed to his role as CEO in 2010 and has been credited with transforming the state-owned Qatargas into the world's largest LNG producing company. Today Qatargas has a production capacity of 42 million tonnes per annum (Mtpa). It delivered the commissioning LNG cargo to the new Singapore LNG Terminal in March 2013. Prior to Qatargas, Sheikh Khalid was the Director of Ras Laffan Industrial City (RLIC), Qatar's main industrial hub for production of LNG and gas-to-liquids.
1. As more LNG supply projects come online around the world, what are your views on the global LNG supply/demand landscape from now till 2020?
Sheikh Khalid Bin Khalifa Al-Thani: Global demand for energy has been increasing at a steady pace, whereas natural gas demand growth in the non-OECD region has in fact been quite remarkable. While overall global energy demand has grown by 2.5 percent per annum during the past decade, natural gas demand in non-OECD countries has increased at yearly growth rates of over 4 percent. The favorable characteristics of LNG in that it is an affordable, clean burning and reliable fuel that can be used efficiently in power generation and by industrial, commercial and domestic consumers, have led to the rapid growth in LNG deliveries to all four corners of the world. In fact, LNG demand growth has been phenomenal. During the past ten years alone, LNG demand has risen by almost 150 percent.
Looking ahead, the prospects for the LNG industry continue to be healthy, with many industry observers forecasting a doubling of demand during the next 15 years. Several factors are underpinning this robust growth forecast. These include the environmental benefits of increased natural gas usage and LNG's ability to help alleviate countries' security of gas supply concerns, which have often been exacerbated by falling output from legacy gas production areas. Technological advances have also helped LNG to compete more effectively with other fuel supplies.
2. How will Qatargas' production output and position as an energy exporter evolve with the changing supply/demand landscape?
Sheikh Khalid Bin Khalifa Al-Thani: In addition to deepening our relationships with our existing buyers, Qatargas is firmly committed to helping more countries benefit from our clean energy resource.
Strong demand, the need for clean energy and declining legacy gas production are opening new LNG markets in Asia. Concerns over security of gas supply are helping facilitate our further penetration into European and Latin American markets. Meanwhile rising demand, partly due to growing populations, and the challenges with developing domestic gas reserves are driving robust LNG imports into the Middle East region. Qatargas aims to be the global LNG supplier of choice for each of these regions as well as for others that develop in the future.
3. How is Qatargas planning to tap into the growing LNG market in Asia? Given the varying gas prices across markets and increasing production of shale gas, how do you see this affecting gas prices in Asia?
Sheikh Khalid Bin Khalifa Al-Thani: Asia continues to be one of our main markets. Japan was the founding importer of LNG from Qatar. Qatargas commenced long-term deliveries of LNG to Japan in 1996 and has since delivered well over 1,600 cargoes to Japan. This included helping Japan cope with the additional short-term demand for energy in the aftermath of the Great East Japan Earthquake in 2011 and the signing of several SPAs with Japanese customers in 2012. We have also entered into long-term agreements for the supply of LNG into China and Thailand.
In addition, Qatargas is doing what it can to support its Chinese partners, CNOOC and PetroChina, to expand their infrastructure. We have delivered commissioning cargoes to PetroChina's Rudong and Jiangsu terminals and CNOOC's terminal at Ningbo. In March this year, Qatargas also delivered the first ever LNG cargo to Singapore to commission Singapore LNG Corporation Pte Ltd's (SLNG) LNG Terminal.
Recent technological innovations have made shale gas production in certain parts of the world economically feasible. For example, the United States appears to be on track to becoming a net LNG exporter through shale gas development. Such exports of LNG through upstream shale gas development will help grow new markets for natural gas. Nevertheless large scale production of shale gas seems some way off commercialisation in other parts of the world where various considerable technical and regulatory hurdles still exist. LNG is produced and delivered today and is meeting energy needs all over the world, consistently and reliably. As a matter of fact Qatar has delivered cargoes to China, USA, Canada and the UK; and has concluded an agreement to deliver LNG to Poland. It is worth mentioning that all of these countries have potential reserves of shale gas.
It is in the interest of all LNG industry participants that projects along the entire value chain will be developed. The LNG business requires participants to make very large capital investments in projects with significant project risks. We believe that the nature of the LNG industry requires long term partnerships through long-term contracts. In order to incentivize participants such as end users, producers, financiers and governments to invest in the new build of much needed replacements and additions of capacity in the entire LNG value chain, long term contracts underpinned by oil index pricing continues to be the norm.
4. Does Qatar envisage that natural gas will eventually replace other fuels in areas where it is traditionally not a major fuel, such as land, sea or air transportation?
Sheikh Khalid Bin Khalifa Al-Thani: Many industry experts have forecasted that the demand for energy will continue to grow robustly. Therefore, now and certainly in the future all forms of energy will be needed to meet energy needs, including the need for transportation fuels. Natural gas is expected to be a preferred fuel in that mix because of its availability, affordability and as an environmentally acceptable fuel and is thus expected to generally outstrip growth rates vis-à-vis competing fuels. Increasingly stringent environmental regulations, combined with gas' competitiveness compared to other fuels, will help incentivize the necessary development of new infrastructure to grow natural gas' penetration in the transportation sector. We are already seeing numerous initiatives for LNG ship bunkering for sea and river vessels and barges as well as the use of LNG in trucks and buses in various countries such as the United States and China. The potential is there for this market to grow and reach a significant scale.
5. While Qatar is the world's largest supplier of LNG, it is also advocating responsible energy exploration and working to diversify its international energy reach. What other new horizons do you see in Qatargas' future in the energy sector?
Sheikh Khalid Bin Khalifa Al-Thani: As a premier LNG company, Qatargas is very conscious of its responsibilities. We are committed to continuing the safe and reliable operation of our facilities and providing reliable energy supplies to our customers globally. As we look into the future, we in Qatargas will continue to demonstrate our ability as a reliable and safe global supplier of LNG adding to the energy diversity of countries in Asia, Europe and the Americas.
Designing and continually improving the Company's facilities and operations so that we minimize our environmental footprint remains a top priority. We are fully committed to meeting or exceeding the most stringent government regulatory and industry standards through sound operating practices and innovation. We work proactively, within our industry, to promote environmentally responsible operating practices.
We have various projects in this area and I would like to highlight the environmental excellence project named Jetty Boil-Off Gas Recovery Project (JBOG). This project will make productive use of the gas that boils off during the loading of LNG carriers at the Ras Laffan Port and thus effectively reduces product-related emissions by over 90 percent. Also Qatargas is currently undertaking an operational excellence project named the Plateau Maintenance Project (PMP). The PMP will ensure that the production capacity of Qatargas 1 is maintained at 10 million tonnes per annum (MTA) of LNG. This will be accomplished by drilling additional offshore wells, modifying associated offshore facilities, modifying the existing Qatargas Trains 1, 2 and 3, and building additional onshore facilities.