Qatar’s economy keeps scoring high marks in matters related to the gas sector in general and liquefied natural gas (LNG) in particular. Suffice to say that Qatar is the world’s largest exporter of LNG by boosting a record 77 million tonnes per year in 2011.

According to BP’s Statistical Review of World Energy, Qatar’s LNG output accounts for 35 per cent of the total capacity in the world. Still, the same source suggests that LNG business grew by a hefty 10 per cent in 2011. Much to its credit, Qatar accounted for almost 88 per cent of global LNG growth in 2011.

Qatar’s gas industry is supported by some hard statistics. According to BP’s publication, Qatar’s share of natural gas reserves stands at 25 trillion cubic metres or 12 per cent that of the world. Only Russia and Iran possess more gas reserves than Qatar by virtue of accounting for 21.4 per cent and 15.9 per cent of the world’s share respectively.

Qatar is capable of scoring high marks in the gas business in spite of not being a key producer of natural gas. As such, Qatar is not a major producer of gas per se, as evidenced by merely accounting for 3 per cent of the world’s total in 2011. In fact, fellow Gulf Cooperation Council (GCC) state of Oman accounted for 4.5 per cent of total natural gas production in the world in the same year.

Yet, Qatar is a leader in LNG, a key and growing component of global gas trade. And prospects look promising for Qatar on the back of exceptional figures relating to gas reserves.

Links with Japan

Qatar’s LNG clients include US, UK, Spain, India, South Korea and Japan, to name a few. In fact, Japanese firms were the first to sign up for LNG from Qatar. Chubu Electric Power Company led the way in 1992 with a long-term contract with Qatargas.

Not surprisingly, Qatar’s LNG deliveries started with the first cargo shipment to Chuba Electric in 1997. What’s more, the same Japanese company recently committed to importing some 15 million tonnes of LNG from Qatar over a 15-year period, starting from 2013.

Other examples include a fresh contact between Qatargas and Kansai Electric Power Company to buy 500,000 tonnes per year of LNG for 15 years from January 2013. It is suggested that more than 30 Japanese companies are active in Qatar’s LNG business, including Tokyo Electric Power, Itochu Corp. and Nissho Iwai.

The deals partly explain the steady rise in the value of trade between Qatar and Japan. According to Doha Bank, bilateral trade between the two countries has scaled up from US$18 billion in 2009 to $31 billion in 2011.

In some ways, Qatar’s LNG triumph lies in its pricing strategy, namely going for oil-indexed gas pricing. This practice helps ensure sustainability for producing gas while competing with oil, the most demanded energy source.

Opposition

Certainly, the practice is not famous with some buyers, especially those who insist on benefiting from relatively lower gas prices when compared to oil. Closer to home, several years ago, Qatar dropped the option of exporting gas to Bahrain. One reason behind the move was the inability to secure a long-term contract of enough supply.

By one account, absence of promising pricing is partly blamed for the lack of emphasis on the part of some GCC countries to make full use and develop their gas industries. Conversely, the emphasis is primarily reserved for the oil at the expense of gas.

— The writer is a Member of Parliament in Bahrain.