Qatar massive Gas production increase: Good news for Europe energy security

Qatar massive gas production increase, is good news for Europe and Asia energy security, and probably good news also for decarbonization. Its efforts to dominate the energy market are underappreciated from a sustainability angle, as this move will allow many low income countries, particularly in Sub-Sahran Countries to move out of their addiction to coal.

Qatar, the third largest Liquefied Natural Gas (LNG) exporter, just announced its largest increase in gas production ever. The expansion of the North Field, the world's largest gas field, from 77 million tons per annum (mtpa) to 142 mtpa by 2030 represents an 85 percent increase in production. This expansion, which is trillions of dollars’ worth of natural gas reserves, comes at a time when global demand for LNG is high, particularly in Europe and in Asia. Prices are historically low compared to the high prices of the 2022 supply crunch which resulted in 600 per cent energy inflation in Europe. Through this expansion, Qatar will secure an even bigger share of the global natural gas trade, adding more than $30 billion to its annual revenue in the process (Bloomberg 2024).

Qatar, being a low-cost LNG supplier, is poised to benefit from these production expansion plans. Additionally, the country's reputation as a reliable supplier will increase, especially following the temporary pause in production increase in the U.S. The expansion of Qatar's gas production also contributes to global energy security, providing stability to markets that have been affected by conflicts in Ukraine and the Middle East. Qatar's strategy is basically to flood the global market of natural gas and in so doing, make LNG plentiful and cheap enough to stimulate global demand. Demand increase is also expected from coal addicted emerging markets, with potential positive decarbonization outcomes.

Despite recent price corrections, major gas producers like the U.S., Australia, and Russia are all seeking to increase output, anticipating further demand growth particularly from Asia and Europe. However, the long-term viability of natural gas as a cleaner alternative to oil and coal is being questioned due to climate change stricter regulations. Regardless of these, Qatar wants to become the leading gas supplier “chocking out” all other suppliers such as Russia, the US and Australia.

What about Qatar decarbonization commitments? While natural gas is considered a cleaner energy than oil and coal, it is still highly polluting. If Qatar exploits all its gas reserves, it will add approximately 50bn metric tons of CO2 to the atmosphere (once burned). This is more than the world annual emissions (the Guardian 2022). Also, according to the IEA, no new fossil fuel infrastructure should be built if the world is to avoid breaching the 1.5C limit and accomplish the Net-Zero objectives recently reaffirmed at COP28.

While these are valid points, behind Qatar increase in gas production lies a compelling climate mitigation angle. Qatar is promoting natural gas as a "bridge fuel" towards Net-Zero, enabling low-income countries, particularly in Africa, to decarbonize electricity generation by replacing coal-fired power stations with gas-fired plants. This strategic shift is expected to yield significant climate dividends if the gas price point is competitive enough to make low-income countries switch to this cleaner energy source.

In conclusion, while Qatar's gas expansion will boost its economy in the short term and enhance global energy security, it could also enable climate mitigation in low-income countries which are addicted to coal. As Qatar does so, and the world transitions to cleaner energy sources, Qatar will need to balance its economic interests with a robust commitment to reducing carbon emissions and eventually diversify its economy away from fossil fuels.