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With the global LNG market looking well-supplied, Qatar, the world’s largest producer, is adapting to lower prices. Such adaptations are given added urgency by the prospect of more LNG coming online in the coming months.
With its 77mn tons/year of LNG export capacity, Qatar has built a reputation as a reliable, key supplier acting as a swing producer between Europe and Asia and honoring its oil-indexed long-term contracts with buyers (MEES, 17 April). But like other Gulf producers, it has been shaken by crude prices more than halving since mid-2014 – Brent is currently trading around $50/B.
In addition to the impact of weaker crude prices on oil-indexed long term contracts, LNG sellers and producers have had to get used to declining spot prices in East Asia, following the start-up of PNG’s LNG plant in Papua New Guinea and BG’s Queensland Curtis plant last year, contributing to spot prices declining to an average of $7.75/mn BTU in H1 2015, down 52% year on year.
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