Qatar Says Big Natural Gas Expansion Plans Remain Despite Global Glut

(Bloomberg) --

The world’s biggest liquefied natural gas producer plans to reduce its spending by about 30%, but cuts won’t affect Qatar Petroleum’s current production or expansion plans, said Saad Al-Kaabi.

“All the major capital projects are moving ahead,” said Al-Kaabi, the company’s chief executive officer and the country’s energy minister, in an online briefing Thursday. QP won’t cut capital expenditure in projects “that affect production or future developments,” only those that were “good to have” but not essential, he said.

QP told its employees it would finalize plans to cut its workforce and investments after the Eid-al-Fitr holiday starting in the next few days. Al-Kaabi declined to say how many jobs would be cut.

Oil and gas companies globally are reducing spending in response to low energy prices. Prices at European and U.S. gas hubs have crashed to below $1.50 per MMBtu from almost $12 at their peak last year. The Japan-Korea Marker, a benchmark for LNG delivered to northern Asia, is trading near $2 per MMBtu.

Qatar is well placed to weather low prices because it produces LNG very cheaply, said Al-Kaabi. “If we stop selling LNG because of cost there is something drastically wrong in the LNG market,” he said.

Qatar intends to increase its LNG production through a multistage expansion program. The tiny Persian Gulf state intends to expand its annual LNG export capacity from 77 million tons to 110 million tons by 2024 and to 126 million tons by 2027.

QP will invite U.S. oil majors Exxon Mobil Corp., Chevron Corp. and ConocoPhillips for talks to form a joint venture to develop the first phase of the project after it appoints its contractors in December.

Despite its cost-cutting plans, QP is looking for opportunities to invest in projects around the world, particularly where tough market conditions have lowered the cost of investment, said Al-Kaabi.

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.