* 5 mln tonnes/year going to China instead of US
* China paying more money for the gas
* Qatar to reach 77 mln tonnes/year LNG capacity Sept 2010
(Adds background, details)
By Luke Pachymuthu
RAS LAFFAN, Qatar, Oct 27 Qatar is diverting
around 10 percent of its liquefied natural gas (LNG) exports to
China from the United States, Qatar's oil minister said on
Energy-hungry China is paying more for the gas from the
world's largest LNG exporter than the United States, Abdullah
al-Attiyah told reporters at a press conference.
"We will not go to a low price market. There is a lot of
demand for our gas elsewhere," said Ibrahim al-Ibrahim, adviser
to the ruler of the Gulf Arab state.
U.S. gas prices have been pressured this year by increased
domestic supply, low demand and record-high inventories,
deterring shippers from sending large amounts of LNG to U.S.
"We will go to the U.S. market if prices justify it, but I
don't think we will dump any supplies there," Ibrahim
al-Ibrahim told reporters after Qatar inaugurated a giant new
LNG production facility.
Qatar has sold most of its gas on long-term supply
contracts, but Qatari producer Rasgas signed short-term
flexible deals earlier this year giving it the option to supply
LNG to two U.S. terminals this year and next.
And Qatargas, the other LNG exporter from Qatar, will have
the option to send gas to its Golden Pass terminal in Texas
when it comes online in 2010.
However, these flexible deals will not result in many
Qatari cargoes heading to the United States should prices stay
"We have a right to divert cargoes when we can sell the gas
into a better market," Qatar's Oil Minister Abdullah al-Attiyah
said at the same event.
Analysts do not expect Qatar to send many cargoes to the
United States in the short term.
"I don't really see the Qataris hitting the U.S. with much
LNG unless there's no other place for it to go," said Zach
Allen, analyst for Pan Eurasian Enterprises in North Carolina.
"China and India have both taken a lot of LNG this year."
China's energy demand is rising while U.S. demand falls.
China imported a record volume of LNG in September, when it
also posted its fastest oil demand growth in over three years.
China received its first LNG cargo of about 216,000 tonnes
from Qatar last week. The cargo was the first in a 25-year
supply agreement between two state companies: the China
National Offshore Oil Corporation (CNOOC) and Qatargas.
Qatargas, one of two LNG producers in the tiny Gulf Arab
state, has diverted 5 million tonnes per year (tpy) of LNG to
China that was previously earmarked for the United States,
Qatargas signed the deals last year to sell 3 million tpy
to PetroChina Co Ltd (0857.HK)(601857.SS) and 2 million tpy to
CNOOC, but it was unclear then the supplies had been diverted
from the United States.
The volume is about 10 percent of Qatar's capacity of
around 55 million tpy.
U.S. oil major Exxon Mobil (XOM.N) is the largest foreign
investor in Qatar and has a stake in all of the projects coming
on line this year to double Qatar's LNG production capacity to
62 million tpy.
Qatar has brought online three LNG production facilities
this year - at 7.8 million tpy each they are the largest LNG
plants in the world - boosting its capacity by over 24 million
tpy from 31 million tpy last year. Another plant of equal size
was due for completion before the year's end. [ID:nLQ508500]
Two more plants were due online next year, keeping Qatar on
track to reach LNG capacity of 77 million tpy in September
2010, Attiyah said.
Tiny Qatar sits on the world's third-largest gas reserves.
The source of its gas, the North Field, is the world's largest
pure gas reserve.
(Additional reporting by Edward McAllister in New York;
Writing by Simon Webb; editing by Lisa Shumaker)