Qatar Petroleum International and Exxon Mobil Corporation (NYSE:XOM) signed a memorandum of understanding yesterday to explore unconventional gas resources in North America and global resources in liquefied natural gas (LNG). The agreement was signed in Berlin, and it is meant to address the evolving and growing demand of natural gas worldwide.

Qatar-Exxon logo

LNG is created by chilling gas to -162° Celsius, which turns it into liquid and shrinks its volume by 600 times, allowing it to be shipped to far-off towns and cities where the energy is needed. Exxon and Qatar Petroleum International are involved in LNG projects in Qatar, the world’s number one exporter of LNG. They also share interest in LNG terminals in the UK, Italy, and United States. Particularly, they operate the main Trains at Ras Llaffanin Qatar and  and other facilities such as South Hook import terminal in the UK and the Golden Pass project in the US.

Earlier this month, Exxon Mobil Corporation (NYSE:XOM) and partner BHP Billiton plc (NYSE:BBL) (LON:BLT) released plans to anchor a floating liquefied natural gas (FLNG) vessel extending 495 meters (541 yards) at sea into the remote Scarborough natural gas field offshore Western Australia. The companies are waiting for government approval and plan to start production as early as 2020. Exxon has a bullish outlook for natural gas demand in Asia. By building a floating natural gas plant offshore Australia, Exxon plans to bank on the proximity of the plant to Asia to sell natural gas to neighboring countries.

Competitors are also looking to profit on increasing natural gas demand. Royal Dutch Shell plc (ADR) (NYSE:RDS.A) (NYSE:RDS.B) also plans to deploy FLNG vessels offshore Australia and elsewhere. The firm is the pioneer in LNG technology; it has 5 decades of experience deploying LNG on land. Moving the production offshore to a floating natural gas vessel could provide access to new gas resources and also reduce the environmental impact of production on land. There will no longer be a need for pipelines and other land infrastructure to extract natural gas and development costs could decline.

Shell, like Exxon Mobil Corporation (NYSE:XOM), is also optimistic about natural gas demand noting that the world will increasingly rely on gas as an energy source, rivaling oil and coal. Shell anticipates that natural gas could become the largest energy supply as energy demand doubles by 2050 due to population growth. Countries such as China could quintuple natural gas demand while growth in the Middle East and Asia could double today’s demand. Developed regions such as Europe will grow energy demand at a more gradual pace.