OAPEC to Raise LNG Production Capacity by 40% in 2027

The Organization of Arab Petroleum Exporting Countries (OAPEC) expected on Friday to raise the production capacity of liquefied natural gas (LNG) in member states by about 40% by 2027.

The organization's gas expert, Wael Abdel Moati, told the meeting of gas experts at the United Nations of the Economic Commission for Europe, held from 24 to 25 March, that "OAPEC" seeks to raise production capacity to reach about 200 million tons annually, compared to 138 million tons annually in 2021.

At the same time, OAPEC confirmed that natural gas, especially liquefied one, will remain a major fuel in the future and can provide energy security for different markets.

"OAPEC" linked access to its plans to the need to continue pumping investments into the research and development sector in the Arab countries to provide the required supplies for the markets in the future.

The organization also drew attention to the need to take into account energy security issues along with energy transition issues to ensure the stability of global energy markets and avoid sudden fluctuations in prices.

The meeting discussed the current role and future prospects for the Arab region in meeting Europe's gas needs.

OAPEC clarified to the meeting that the exports of Qatar, Australia and the United States represent 60% of the total global trade of liquefied natural gas, which achieved a growth of 7% in 2021 after recovering from the repercussions of the pandemic.

It also focused on the importance of the European market, which depends more than 60% on gas imports, from which the old continent's production is constantly declining with the growing need for imports due to the recovery in demand for gas.

The Arab countries are the second largest exporter of gas to Europe after Russia, with a 14% share of the total gas supplies in the European continent in 2021, pided into 7 percent for pipeline gas exports from Algeria and Libya, and 7% of exports arriving in the form of liquefied natural gas from Qatar, Algeria and Egypt.

According to OAPEC, LNG exports from Arab countries to Europe depend on medium and long-term contracts, representing 80% of the total exported from them at reasonable prices. As for US exports, they depend on selling in the spot market, which is usually higher in price. In some cases, it reaches many times the price in long-term contracts.

With the European Commission seeking to persify gas sources and reduce dependence on Russian gas, which constitutes 32 percent of the total gas supplies in Europe, Europe is turning to liquefied natural gas, which opens prospects for economic partnership between Arab countries and European countries.