Qatar Petroleum in JV with Exxon to export US LNG
Qatar Petroleum (QP) and ExxonMobil announced to use their joint venture called Golden Pass Products to export liquefied natural gas (LNG) from USA.
With this joint venture, QP and ExxonMobil intends to use the over production of shale gas in USA to supply European and Asia Pacific markets where the gas market prices are 3 to 10 times higher than in USA.
In that perspective the debate in USA is about the best way to take advantage of these low gas prices with two options:
– Export it to regions (Europe, Asia) where the local prices could offer good margins in including LNG transformation and transportation costs
– Monetize it in US in developing a local petrochemical industry through an integrated upstream–downstream business model benefiting from a global competitive advantage based on a cheap feedstock provided by the abundant shale gas.
Whatever shall be the outcome of the US debate and the chosen option between exporting LNG or investing on downstream activities, the consequences will affect the global market and its major key players.
Whatever shall be the decision in the USA, most likely a combination of the both options, Qatar Petroleum and Sabic want to be part of it, Qatar Petroleum in any LNG export program and Sabic in any petrochemical opportunity.
QP and ExxonMobil to convert Golden Pass LNG into export terminal
Qatar Petroleum and ExxonMobil are planning $10 billion capital expenditure for a capacity of 15.6 million t/y of LNG.
Sabic to increase its global footprint by acquisitions
Sabic became a global company in taking over the
– Dutch DSM Petrochemicals in 2002
– UK’s branch of Hunstman in 2006.
– American GE Plastics in 2007.
But this advantage is now at risk in comparison with US market.
By the way most of the crackers in project in Saudi Arabia and in the Middle East in general are designed to be mixed in order to accept alternative feedstock in case of natural gas shortage.
The least point is related to Saudi Aramco investing heavily downstream to develop its own petrochemical activities in Saudi Arabia, such as with Dow Chemical in Sadara or with Total in Satorp expansion.
Therefore the ways out for Sabic go through acquisitions and specialties.
Acquisition in USA would position Sabic immediately on the place to be in case USA would decide to favor this sector to monetize its shale gas.
The remaining part of Hunstman in USA would fit perfectly in providing Sabic with a big wallet of valuable licenses.
The French Arkema would also be a good target as having multiple facilities in USA and holding a long standing expertise in high added value specialties.
If the booming shale gas in USA pushed to put on hold many projects on upstream, such as Shtockman in Russia, it favors capital expenditure on midstream with new pipelines and LNG export terminals, such as the Golden Pass LNG project between Qatar Petroleum and ExxonMobil, and on downstream with consolidation and deployment driven by the leading petrochemical companies such as Sabic.