Other LNG producers were not impressed by recent announcement of Qatar that it will develop the world’s largest LNG production facility. To keep its top spot in LNG exports, the tiny Gulf nation is now lowering its prices and expanding into the spot market. This might lead to the cancellation of certain United States projects. Projects involving LNG.
Liquefied natural gas from the United States rapidly became a challenge to the world’s largest exporter. However, Qatar remains the cheapest LNG producer. The abundance of shale gas has made it affordable and competitive in some markets, resulting in a flurry of LNG ventures as the United States stakes its claim on the global market.
Since United States LNG producers index their gas to Henry Hub benchmarks rather than crude oil, the country rapidly rose to become one of the world’s largest exporters. These producers benefited from the rapidly expanding spot market for LNG. It’s no surprise that a slew of new projects followed the first wave of LNG capacity. However, not all of them succeeded, and some are on the verge of being economically unviable.
Some have already done so. The number of LNG projects pending final investment decisions has decreased in the last year, owing to the pandemic. However, it to the fact that the economics of most of these projects have changed. According to Wood Mackenzie, no new LNG project in the United States will make a final investment decision this year. The explanation for this is that long-term buyers are difficult to come by.
Competition in the LNG room is fierce, and with Qatar firmly on track to securing its top spot in the long run, it will only get tougher. Many LNG producers exist around the world, but they are all more expensive than Qatar.