Qatar is looking to lock in a new market for its natural gas exports in Greece by offering to build a receiving plant, officials say. The preliminary agreement announced on Monday comes as the world's largest producer of liquefied natural gas (LNG) grapples with reduced demand for the fuel globally, even as new production plants that have been under construction for years come online.
Much of the new output of LNG - gas cooled to a liquid state and shipped by tanker - coming on stream this year and next was planned for the US market, but an oversupply there has led Qatar Petroleum to seek higher prices in Europe and east Asia. Greece is one such market and Qatar has offered to pump ?5 billion (Dh24.09bn) into building a port facility to convert LNG into gas that would be used in power stations and heavy industry.
The two also agreed in principle for Qatar to supply regular shipments of LNG to Greece but did not specify how much. George Papandreou, the Greek prime minister, welcomed the agreement "at this time of economic hardship" as the country's government struggles to emerge from a huge fiscal debt. If built, the "regasification" terminal would be the third in Europe in which Qatar Petroleum, a government-owned company, holds a major equity share. The others are in Britain and Italy.
Qatari gas companies have been aggressively courting buyers in Europe since it became clear a surprise surge in US production would sharply curtail demand for imported LNG there. US production was pushed up by advances in drilling technology that allowed producers to tap into shale gasfields that were previously uneconomical. As a sign of reduced US demand, the gap in prices between US and British gas futures contracts widened to its highest level in six months last week. Prices for gas to be delivered in December were 38 per cent higher on the Intercontinental Exchange in London than on the New York Mercantile Exchange on April 30, according to Bloomberg.
Poland signed a deal last year to start imports of 1 million tonnes of Qatari LNG a year. The Greek market could be similarly modest in size, analysts said. cstanton@thenational.ae