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Highlights

Qatar to raise LNG capacity to 126 million mt/yr by 2027

Boosts gas reserves at giant North Field

Qatar's total hydrocarbons output to reach 6.7 million b/d

London — Qatar plans to hike its LNG production capacity by 64% over the next seven years with new expansions to its giant North Field in a move set to consolidate its current position as the world's top LNG exporter.

State-owned Qatar Petroleum said it expects capacity to rise to 126 million mt/year by 2027 as it starts engineering work on two "mega trains," escalating an already ambitious expansion plan in an increasingly competitive market.

Qatar Petroleum had previously announced its intent to raise LNG production capacity to 110 million mt/year from current levels of 77 million mt/year.

Qatar Petroleum CEO Saad al-Kaabi, who also serves as Qatar's energy minister, said new studies have boosted its reserves in the North Field -- the world's largest natural gas deposit -- which will enable a new LNG facility in the north of the country.

The field is now estimated to hold 1,760 Tcf of gas, in addition to 70 billion barrels of condensates, as well as significant quantities of LPG, ethane and helium, he said.

"We have confirmation that the productive layers of the North Field extend well into Qatari land in Ras Laffan," Kaabi said at a press conference, according to a Qatar Petroleum news release. "Studies and well tests have also confirmed the ability to produce large quantities of gas from this new sector of the North Field."

QP said its latest North Field appraisal well was drilled onshore in Ras Laffan, about 12 km from the coast.

The company will commence engineering work for two additional LNG "mega trains" with a combined capacity of 16 million mt/year, it said.

As a result, Qatar's hydrocarbon production will increase to about 6.7 million b/d of oil equivalent.

Qatar under threat as top LNG exporter

The North Field has supported Qatar's position as the world's biggest LNG exporter for years with shipments averaging around 300 million cu m/day. But a raft of recent LNG projects in Australia mean Qatar will likely temporarily lose its crown as the top LNG supplier next year.

The ramp-up of Australia's giant Prelude LNG project in 2020 is expected to push Qatar into second position, at least until the North Field expansions come onstream.

LOW-COST PRODUCER

Qatar, which pumps about 600,000 b/d of crude, quit OPEC at the end of 2018 after 57 years as a member on the grounds it wanted to concentrate on building on its position as the leading LNG exporter.

The small Persian Gulf sheikhdom in 2017 lifted a 12-year self-imposed moratorium on developing the North Field, which crosses the maritime border into Iranian waters.

Iran, which calls the field South Pars, has also made it a priority to ramp up production there, though US sanctions have slowed its efforts.

The LNG market has seen record volumes of production coming online, with the US, Russia, Mozambique and Canada set to launch major projects, depressing prices.

US regulators last week approved four additional LNG projects with a total capacity of 45 million mt/year over the next few years.

In an interview with S&P Global Platts in October, Kaabi said he was unconcerned by the price outlook given Qatar Petroleum's position as a low-cost producer of gas.

"Demand for gas is going to be there for a long time," he said. "The issue is that if the price is so low it will force the higher cost people to shut down."

"We want to be at the lowest end of that, so no matter what happens in the market, we will always have a market that will give us a margin that we can make money in because of our low costs. So we don't worry about low gas prices."

But with the global LNG market seen saturated -- at least into the middle of the next decade -- Qatar will need to aggressively market its LNG to new customers, according to Platts Analytics.

"Qatar is by far the lowest cost gas producer in the world, but that has never been in question. What really matters now is how Qatar is going to market this new export capacity. With over 20 Bcm of export contracts expiring in the next couple of years, Qatar needs to find new markets, not plan expansions," said Platts senior LNG analyst Samer Mosis.

-- Herman Wang, herman.wang@spglobal.com

-- Robert Perkins, robert.perkins@spglobal.com

-- Edited by Shashwat Pradhan, newsdesk@spglobal.com