Qatar To Be World’s Largest Exporter of Helium

Qatar, the world’s largest exporter of liquefied natural gas (LNG), is on track to become the world’s leading exporter of industrial gas (helium) pushing US to the second position as exporter of the noble gas. With the inauguration of Helium 2 plant in Ras Laffan (in December 2013), which is the largest production facility in the world, with a capacity of 1.3bn standard cubic feet per year, the rate is nearly double Helium 1’s yearly production, which is about 700m standard cubic feet per year, according to ‘The Report Qatar 2014’, the latest annual publication by Oxford Business Group (OBG). Interestingly, Qatar’s helium expansion has come at a time when the demand for the product has grown faster than supply, putting pressure on the global market. The state is well positioned to capitalise on the export of helium, especially when the price as well as demand for the ‘noble gas’ is expected to remain tight due to various global factors, including the policy in the US – the world’s largest helium producer. Industrial helium is critical for feedstock in a variety of scientific and high-tech industries. The product now has a wide range of applications such as to manufacturing of computer chips, superconductors, LCD screens, fibre optic cables, medical lasers such as magnetic resonance imagery (MRI) and other due to its unique chemical properties. In addition, helium is also needed for rocket-engine testing, arc welding, air-to-air missile guidance, and other civilian and military uses. As a result of strong demand and inadequate supply, the prices of grade-A gaseous helium have nearly quadrupled over the last 10 years to $6.13 per cubic metre (pcm) from $1.62 pcm in 2003. The prices rose over 35 percent in the past three years alone, according to data from the US Geological Survey. “Indications are that the mismatch between supply and demand in recent years is not the result of any sort of shortage. Global consumption is around 180m cu metres per year but global supply is 50bn cu metres,” said the OBG report quoting the US Geological Survey. The report anticipated that the policy in the US, which controls about 30 percent of the world’s helium supplies, could be altering the market. The US government’s Federal Helium Reserve, located in Texas, was set to close in late 2013 due to a sunset provision set in 1996. The helium industry responded by raising prices in anticipation of tighter supplies. However, lawmakers in the US judged that the private sector was not yet ready to shoulder current demand, and decided to keep the reserve afloat with an October 2013 law. The US Congress’s decision to maintain the helium programme may help hold prices down in the short term, but other trends point to rising demand and decreasing supply in the long term. As a result of market volatility, several firms are taking measures to conserve the gas by diversifying suppliers and reducing the amount used. “In any case, Qatar’s increase in production seems fortuitous. The state’s entry into the market will allow it to extract a valuable export – industrial helium – from its natural gas resources. With demand on the rise and the world’s largest exporter beginning to reduce supply, Helium 2’s returns on investment could be strong,” said the OBG report. The product has rising prospects from countries with vibrant electronics and IT industries. Japan, a major helium importer, sourced 98 percent of their helium from the US in the first three quarters of 2012. Given the high demand for the product, Japan, in January 2013, inked an agreement with Russian energy giant Gazprom to develop a helium production project in the eastern Siberia.

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