BP plc (ADR) (BP): Caspian Gas Signals Greater Opportunity for Qatar

However, Europe’s intent to diversify its sources of energy and Turkmenistan’s lack of interest present the opportunities for increased natural gas exports to Western Europe elsewhere.

Enter Qatar and ExxonMobil

The most likely and capable source of liquefied natural gas will be Qatar, which has quickly risen to become a major producer. According to BP plc (ADR) (NYSE:BP)’s Statistical Review of World Energy in 2012, Qatar holds the third largest reserve of natural gas after Russia and Iran. Sitting on this vast reserve, the country has not stayed idle while long-term global demand for hydrocarbons continued to rise.

Between 2008 and 2012, Qatar doubled its gas production, originally intended for the U.S. market but now redirected to the European market with the advent of the shale gas boom in North America.

The company that is at the forefront of helping Qatar build its natural gas capacity is Exxon Mobil Corporation (NYSE:XOM). It recently signed a deal with Qatar Petroleum International to liquefy Qatari natural gas at the Golden Pass LNG terminal facility in Sabine Pass, Texas. The $10 billion facility will produce 15.6 million metric tons annually and it has already received authorization from the U.S. Department of Energy to export to countries with free trade agreements with the United States.

This will include the European Union in the very near future. Although recent controversy over the U.S. spying has caused few rifts in the trans-Atlantic relations, it does not seem to have affected the free trade talks as bilateral talks began as planned on July 8.

The standing objective of the EU to establish energy security through diversification is destined to provide the above mentioned companies with massive windfall profits in the next decade. Long-term investments should be made by companies working in the Caspian Sea with a close eye on technological progress and the progress of pipeline development in Turkey and the Balkans. Conversely, this bodes poorly for Russian companies that are heavily invested in the South and Nord Stream projects.

The article Caspian Gas Signals Greater Opportunity for Qatar originally appeared on Fool.com and is written by Yong Kwon.

Yong Kwon has no position in any stocks mentioned. The Motley Fool recommends Statoil (ADR). Yong is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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