Qatar Petroleum Signs World's Largest LNG Shipbuilding Order
Qatar Petroleum entered into three agreements for LNG ship construction with the Republic of Korea which when fully executed would result in the construction of more than 100 LNG carriers valued at nearly $20 billion.
Qatar believes that it has secured approximately 60 percent of the global LNG shipbuilding capacity for the next seven years, creating what it is calling the largest LNG shipbuilding program in history. Under the agreements, the three major Korean shipyards - Daewoo Shipbuilding & Marine Engineering (DSME), Hyundai Heavy Industries (HHI) and Samsung Heavy Industries (SHI) - will reserve through the year 2027 a major portion of their LNG ship construction capacity for Qatar Petroleum.
“The signing of today’s agreements with the three esteemed Korean companies reflects our commitment to the North Field expansion projects, even during these extraordinary times,” said His Excellency Minister Al-Kaabi speaking at the signing ceremony. “As I have previously stated, we are moving full steam ahead with the North Field expansion projects to raise Qatar’s LNG production capacity from 77 million today to 126 million tons per annum by 2027 to ensure the reliable supply of additional clean energy to the world at a time when investments to meet these requirements are most needed.”
The new LNG vessels will be equipped with the latest generation slow speed dual-fuel engines, utilizing LNG as a fuel the company said. The ships will be used both to meet the company’s plans for expansion of its local and international LNG projects, as well as replacing part of Qatar's existing LNG fleet.
The news of the order, however, comes at a time when the oil and gas industry, including Qatar Petroleum, has been suffering from the collapse in world prices and slow demand linked to the global impact of the coronavirus.
Worldwide there are reports that LNG projects are being delayed raising questions over the need for increased shipping capacities. Many companies operating in the LNG shipping market are reporting, despite the increased industry interest in the fuel because of its environmental benefits, that demand has been slowing prompting them to reconsider their plans. Indeed, the Saudi energy company Aramco has reportedly entirely shelved its planned entry into the LNG shipping market. Analysts had expected Aramco to invest more than $2 billion to develop its LNG shipping capabilities.
While reiterating its long-term commitment and plans to continue with its exploration projects and new field development, Qatar Petroleum also announced in May that it would be reducing its capital and operating expenses by 30 percent. Further, Qatar’s energy minister has been quoted as saying he expects it will take up to two years for demand to return to the levels they were experiencing before the global spread of COVID-19.
Qatar Petroleum is making a long-term bet on the market saying that as the world’s largest LNG producer they are confident in the market’s prospects. In 2017, Qatar announced its plans for the expansion of its gas fields and it is continuing to pursue its North Field project offshore north-east of the Qatar peninsula. While there are reports of a delay in the project due to the current global situation, Qatar has reiterated its commitment to significantly increase its production capacity.