Qatar News: Natural Gas Market Glut Leaves Nation in a Conundrum - Bloomberg:
Hemmed in by weak demand and scarce storage, the world’s biggest exporter of liquefied natural gas may soon face a stark choice: curb output or ignite a battle for market share that has the potential -- just as in the oil market -- to turn gas prices negative.
Qatar began in February redirecting LNG cargoes away from Asia, where the coronavirus was hobbling sales, and sending them instead to northwestern Europe. That quick fix didn’t last, as the pandemic soon engulfed Europe’s biggest economies and left Qatar struggling for places to park unsold cargoes.
The Persian Gulf state led by Emir Sheikh Tamim bin Hamad Al Thani has a key decision to make with far-reaching consequences. Cutting production of its main export would squeeze government revenue at a time when crude’s collapse is adding to pressure on LNG prices, some of which are linked to oil. An output cut might also enable Australia to strike a blow to Qatar’s national pride by snatching its crown as the world’s top exporter.
If the emirate opts to slash prices to secure sales, however, it might exacerbate the crash in gas that threatens margins even for low-cost producers. A free-for-all could even end up pushing prices below zero, as happened briefly last month in the U.S. oil market when crude flows overwhelmed capacity at the storage hub of Cushing, Oklahoma.
Hemmed in by weak demand and scarce storage, the world’s biggest exporter of liquefied natural gas may soon face a stark choice: curb output or ignite a battle for market share that has the potential -- just as in the oil market -- to turn gas prices negative.
Qatar began in February redirecting LNG cargoes away from Asia, where the coronavirus was hobbling sales, and sending them instead to northwestern Europe. That quick fix didn’t last, as the pandemic soon engulfed Europe’s biggest economies and left Qatar struggling for places to park unsold cargoes.
The Persian Gulf state led by Emir Sheikh Tamim bin Hamad Al Thani has a key decision to make with far-reaching consequences. Cutting production of its main export would squeeze government revenue at a time when crude’s collapse is adding to pressure on LNG prices, some of which are linked to oil. An output cut might also enable Australia to strike a blow to Qatar’s national pride by snatching its crown as the world’s top exporter.
If the emirate opts to slash prices to secure sales, however, it might exacerbate the crash in gas that threatens margins even for low-cost producers. A free-for-all could even end up pushing prices below zero, as happened briefly last month in the U.S. oil market when crude flows overwhelmed capacity at the storage hub of Cushing, Oklahoma.
No comments:
Post a Comment