Inertia is a word that you would rarely associate with the politics of Qatar – the nation bringing the World Cup to the Arab world and which regularly treads a tightrope between Eastern and Western interests on the global stage.

Yet, this is the word chosen in a new report to describe Qatar’s energy policy in relation to the extraction of the land’s most precious export, natural gas, from the giant North Field. Decisions taken some years ago over the rate at which Doha should extract gas from beneath the seabed of the Gulf north of the peninsula have, the report suggests, led to “under-investment” – a term rarely, if ever, used previously when describing Qatar’s hydrocarbon exports.

According to the most recent Economic Commentary report, published by the Arab Petroleum Investments Corporation (APICORP), Qatar must today be considered in the same vein as Kuwait.  

“Under-investment, which has been particularly apparent in Kuwait, is now the case in Qatar as well,” the APICORP report stated, before describing the Kuwait situation. It then continued, “In contrast, Qatar’s stagnation stems from a long-standing moratorium on further development of the North Field. As a result, and despite a shift in emphasis on enhancing oil recovery and expanding the petrochemical industry, energy investment in Qatar has lost momentum.” This may not seem like an imminent concern for the country that comfortably leads the world in liquefied natural gas (LNG) exports, that earlier this year was reconfirmed as having the third-largest proven reserves of natural gas in the world; and in which annual natural gas production is five percent of the world’s total while consumption is less than one percent.

Pressure

So what, in Doha’s eyes, should LNG stand for? The government may very soon find itself under increased pressure to lift the moratorium, which was first announced back in 2005 to conserve the nation’s most valuable resource, but some feel has outlived its purpose.

Substantial new LNG production facilities are due to come online as the current decade rolls on while demand is also set to grow as the world turns slowly but surely from burning carbon-intensive coal to the relatively cleaner natural gas.

“Qatar’s stagnation stems from a long-standing moratorium on further development of the North Field” – APICORP report.

“Between 2012 and 2035, natural gas demand is expected to grow by an average 1.9 percent per year, outpacing all other energy sources,” Qatar National Bank (QNB) stated in a mid-March commentary focused on the natural gas industry, citing figures from the latest BP Energy Outlook, which covers the period out to 2035. “This is likely to lead to higher natural gas prices, including for LNG.”

In QNB’s report, it made clear that, growth will come, led by the burgeoning economies of the East, “Overall, natural gas is expected to be the fastest growing of the fossil fuels,” it states. Non-OECD (Organisation for Economic Cooperation and Development) countries, led by China and India, should generate 78 percent of natural gas demand growth with industry and power generation accounting for the largest increments to demand by sector,” it stated. 

And a further prediction, more perhaps than any other, should give Doha reason to consider the sustainability of its moratorium. “LNG exports are expected to grow more than twice as fast as gas consumption, at an average of 3.9 percent per year, accounting for 26 percent of growth in global gas supply to 2035,” QNB states, again in reference to the BP report.

Should natural gas supply and demand both grow substantially over coming years – which is as much a certainty as anything can be in global energy development – the marketplace, as the collective whole of its two parts, will also grow, particularly within the area of LNG exports.