Qatar's new-found position as the world's leading producer of liquefied natural gas (LNG) has been nothing short of remarkable. The gas-rich Gulf state has pumped more than $60bn into LNG projects and will spend another $35bn by 2012, when exports will spiral to 77 million tonnes a year.

The boom has lifted the fortunes of oil services companies hired to engineer schemes and build facilities. For these firms, which had struggled for years to deal with falling order books and slumping profits, the turnaround has been startling.

Two companies in particular have gained in Qatar. France's Technip and Japan's Chiyoda Corporation formed a joint venture to build the world's six largest LNG trains, signing almost $10bn worth of contracts with subsidiaries of Qatar Petroleum.

The fact the deals were on a fixed-price basis seemed to matter little at the time. The energy market was stable and contractors, eager to find new markets, saw great opportunities.

Now a massive jump in material and labour costs has made the climate far more difficult. Both Technip and Chiyoda say that huge cost overruns threaten the profitability of their Qatari gas projects.

This is a problem for many other engineering, procurement and construction companies, not just those in Qatar. Many are exposed to a level of inflationary risk not experienced before.

Neighbouring countries, aware of the limitations of the traditional fixed-price contracts, have been bringing in different models in response to the market conditions.

Saudi Arabia and Kuwait have started signing contracts that share more of the risk of escalating prices between the clients and contractors.

This approach has not yet extended to Qatar, which remains wedded to the traditional contracts. But with only half of its planned LNG capacity delivered so far, it could now be forced into more negotiations with its partners, and suffer further delays on the projects.