Natural gas industry is slow - RTP pipeline manufacturer excerpts from China National Petroleum News Center

On June 20, CNPC and Qatar Energy signed a cooperation document for the Northern Gas Field Expansion Project in Doha, the capital of Qatar. According to the agreement, Qatar Energy will continue to supply 4 million tons/year of LNG resources to PetroChina for the next 27 years and transfer 1.25% of the shares of the Northern Gas Field Expansion Project to PetroChina.

The Middle East gas industry has grown steadily in recent years. in 2022, Qatar overtook Australia as the world's largest LNG exporter with 80 million tons of LNG exports. In the future, Middle East gas production will continue to grow, reaching 86 billion cubic feet per day by 2030, potentially having a significant impact on the global gas market.

Slow development of the natural gas industry

The background of the agreement between Qatar Energy and PetroChina is that Qatar is significantly expanding the capacity of its Northern Gas Field. The North Field is the largest gas field in the world and the field expansion project includes field development and four 8 million tons per year LNG production lines, which will increase annual LNG capacity by 32 million tons when completed and operational. Qatar aims to achieve 110 million tons per year of LNG production capacity by 2027.

Pipeline gas, a commodity vulnerable to geopolitical conflict, suffered supply disruptions after the outbreak of geopolitical conflict last February. The U.S., which has the most new LNG capacity, has been the biggest beneficiary of Europe's global rush to buy gas "near and far. The Middle East, which has significant influence in the global oil market, has been unable to deliver LNG spot supplies. Qatar, the region's only major LNG exporter, favors long-term LNG agreements that are tied to oil prices, span more than 20 years and cannot be resold to third countries.

Prior to the 21st century, the Middle East treated associated gas as a useless by-product, often burning it off directly. Countries in the Middle East have little incentive to develop gas fields due to underdeveloped gas markets and a lack of gas export routes.

However, the Middle East gas industry has a significant latecomer advantage. With the global energy transition gaining momentum, Middle East gas production is now growing twice as fast as the region's demand. Qatar, the Middle East oil producer with the most successful transition, has become the world's largest exporter of LNG. Other Middle East oil-producing countries face challenges in catching up with Qatar in terms of gas development, such as Saudi Arabia, which will have to face up to the resource endowment gap, and Middle East hotspots, which are unable to develop their rich gas resources due to sanctions.

The Middle East gas industry has indeed been slow to develop. Shell discovered the Northern Gas Field in 1971, but it deemed the field not commercially viable and withdrew its development permit. It was not until 1977 that the Abu Dhabi National Oil Company (ADNOC) built the Das Island LNG receiving terminal that it became a pioneer in the Middle East gas industry. Saudi Aramco began construction of the Master Gas System in the 1970s, which became fully operational in 1982. By the turn of the century, the entire Middle East was producing only 18 billion cubic feet per day of natural gas.