Qatar, the world’s largest producer of the fuel, last month approved a $29 billion plan to boost capacity at its LNG export facility by 64% this decade, and is now urgently seeking to lock-in contracts and undercut rival developers from the U.S. to Australia. Qatar agreed to rates well below those they were demanding less than a decade ago. Pakistan’s latest contract is at a 10.2% link to oil prices, compared to 13.37% in 2016. The Bangladesh deal was done below the 11% mark, according to traders, who requested anonymity to discuss private details.
No coincidence that the first deals out of the gate were for LNG delivered to South Asia, where Royal Dutch Shell expects demand to triple through 2040, out-pacing the rest of the world. Pakistan, Bangladesh and India will need LNG to supplement declining domestic production and to meet growing demand from the industrial and power sectors. Persian Gulf state benefits from being able to produce LNG at a cost lower than most competitors, with the first phase of the expansion viable even if oil prices fall below $20 a barrel. Qatar is also preparing to ramp up exports to Europe. Qatar Petroleum has booked capacity at units that turn LNG back into gas in Belgium, France and the U.K.