North America’s dreams of exporting its wealth of shale oil will not lower global gas prices in the near future, says the head of the world’s biggest natural gas company.
Khalid bin Khalifa Al Thani, the chief executive of Qatargas, says US energy firms’ efforts to provide liquefied natural gas (LNG) to world markets have been “much slower than expected”, and Canadian LNG producers face “significant challenges”.
Gas prices in the United States are about a quarter of LNG prices in Asia, and the availability of low-cost, relatively clean fuel has helped to drive an industrial renaissance in Asia. However, Arabian Gulf nations, with the exception of Qatar, are struggling with gas shortages.
“I believe that gas prices will remain regionalised for the foreseeable future,” said Mr Al Thani at the Singapore International Energy Week, an annual conference. “The North American pricing structure will not maintain the pace to significantly alter the pricing structure in Europe and Asia.”
He joins other Qatari officials who have cast doubt on the influence of shale gas, which threatens to disrupt the company’s network of lucrative long-term gas supply contracts with countries such as Argentina and Japan.
Some point to the need to drill thousands of wells to stave off early production declines. Others, including Mr Al Thani, point to the difficulties US firms have faced in securing energy export licenses from Washington.
Qatar has a moratorium through 2015 on new gas production from its North Field, the world’s biggest gas deposit, as it evaluates domestic energy requirements.
Another uncertainty is the future of the global market as Australia and countries from East Africa and East Mediterranean bring fresh supplies online.
China, the world’s top energy consumer, is also exploring for shale oil.
“That’s why you see a lot of consumers adopting the policy of wait-and-see … they want to see how this volume coming to the market will affect prices,” said Mr Al Thani.
“The uncertainties that we see in the market today are not helping capital-intensive gas resources to be developed in a timely fashion.”