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Qatar merges LNG producers under Qatargas brand

Qatar announced Wednesday the official start of operations of the newly integrated company combining the Persian Gulf state's two LNG producers, Qatargas and RasGas, in a merger Doha hopes will save as much as $550 million a year.

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LNG production will now be operated by a single company called Qatargas, with effect from January 1, state-owned Qatar Petroleum said in a statement Wednesday.

The world's largest LNG operator, with a current liquefaction capacity of some 77 million mt/year, will be led by current Qatargas CEO Sheikh Khalid bin Khalifa al-Thani.

He will oversee Qatar's ambitions to raise its capacity by 30% to 100 million mt/year, which were announced last July just three months after it lifted a 12-year moratorium on further development on its vast offshore North Field.



"Our aim was to integrate the two companies' resources and capabilities to create a truly unique global energy operator in terms of size, service and reliability. We also aimed to create higher value for our stakeholders, and enhance the competitive position of the Qatari gas industry," QP's CEO Saad al-Kaabi said in a statement.

Qatargas' shareholders include QP, ExxonMobil, Total, ConocoPhillips, Shell, Mitsui and Marubeni.

Doha's planned LNG capacity increase is expected to take five to seven years, at a time when the global LNG market is set for a period of oversupply as a slew of new projects comes online, particularly in the US.

Qatar is well placed to compete with any other LNG supplier because it has very low LNG production costs thanks to the co-production of NGLs from the North Field.

It will also be helped by the integration of Qatargas and RasGas, which will save QP around Riyals 2 billion ($549.5 million) each year in operating costs, Kaabi said Wednesday.

Coupled with the size of its existing LNG industry, with well-developed existing infrastructure, Qatari LNG can compete even in a low price environment.

--Adal Mirza, adal.mirza@spglobal.com
--Edited by Alisdair Bowles, alisdair.bowles@spglobal.com