Energy has always played a crucial geopolitical role. Natural gas is a part of this important sector; with the switch from coal-to-gas, the demand for natural gas jumped by 4.6 per cent in 2018, accounting for nearly half of overall demand growth, according to a report published by International Energy Agency (IEA).
As a result, Qatar, the world’s leading liquefied natural gas (LNG) exporter, is expanding its facilities.
In 1971, when Qatari engineers discovered natural gas off the country’s north-east coast, no one knew quite how important the find was. Only after 15 appraisal wells had been drilled over a period of 14 years was Qatar’s North Field established. This field has recoverable reserves of more than 900 trillion standard cubic feet (tscf), or approximately ten per cent of the world’s known reserves, making it the largest non-associated natural gas field in the world.
Although the Asia-Pacific has grown in importance as an LNG exporting region in recent years, Qatar remains the largest LNG-exporting market by a sizeable margin.
Saad Sherida Al Kaabi, the minister of state for energy affairs and the chairman of Qatar Petroleum, speaking during a session at the Doha Forum 2019 said: “Qatar announced in November 2019 that it aimed to lift production of liquefied natural gas (LNG) by 64 per cent to 126 million tonnes per year by 2027, putting oil majors racing to secure a stake in the Gulf country’s expansion plans under pressure to make the best offer.”
Turkey is emerging as a competitive LNG market with under-utilised regasification capacity for current and potential LNG suppliers. The higher LNG price on the Turkish market is encouraging countries, such as Qatar, to enter the market with a longer-term perspective.
Qatar’s LNG investment increased after the Saudi-led blockade on the small Gulf state. Turkey received the largest single LNG cargo from the world’s largest LNG company, Qatargas. A report published by International Gas Union (IGU) states that a result of these LNG investments, Turkey has become the second LNG importer in Europe.
According to former Turkish Ambassador to Qatar, Mithat Rende: “No success ever goes unpunished: Qatar’s hyperactive foreign policy and its apparent desire to play a part in all issues everywhere have been judged by the leaders of some countries as attempts to do things that are disproportionate to its size.” He said at TRT World Forum 2019 that the blockade now being imposed on Qatar may adversely affect its exports of LNG in the medium and long-term.
With a rapidly growing economy and a population of more than 80 million people, Turkey has been one of the fastest-growing energy consumers in the world. Turkey is also an important oil and gas transit destination, decisive to its own import dependence as well as to regional energy security.
The future from a Turkish standpoint on LNG investments is clear, diversification of natural gas supplies, combining traditional pipeline gas with LNG. Additionally, Turkey continues to invest in LNG technology as the newly established terminals and facilities are very important for Turkey in terms of gaining energy self-sufficiency. In 2019, a new LNG floating vessel with a storage capacity of 170,000 cubic metres of gas, started to operate. The new one was replaced with the regasification unit (FSRU) opened in 2016. It also compresses 28 million cubic metres of natural gas to the system on a daily basis. This facility stored the LNG that Petroleum Pipeline Corporation Company (BOTAŞ) purchases from various countries, including Qatar. On the other hand, Turkey also has one more floating storage and regasification units (FSRUs), located in Hatay.
Despite the adverse business and investment climate, the Gulf crisis did not destroy Qatar’s LNG initiatives. Therefore, Qatar will have to push to negotiate new long-term contracts for LNG sales to the Far East and Europe for the period beyond 2021.
As Turkey imports around one million tonnes of LNG each year from Qatar, strengthening LNG infrastructure and increasing the volume of LNG imports between Qatar and Turkey has also become a prioritised energy policy for both countries in the last decade. After two and a half years, it is clear that the Saudi-led blockade of Qatar has failed to prevent or impact on the strategic energy cooperation between Doha and Ankara.
The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.