By TBY | Qatar | Mar 25, 2015
Around 15% of the State’s natural gas production remains allocated to the domestic market. And as Qatar’s economy grows, so do its domestic energy needs, with natural gas consumption growing […]
Around 15% of the State’s natural gas production remains allocated to the domestic market. And as Qatar’s economy grows, so do its domestic energy needs, with natural gas consumption growing by 30% between 2011 and 2012, according to the US Energy Information Administration (EIA) in January 2014. Subsequently, in 2013 consumption increased by 10.3% over 2012 levels according to BP’s Statistical Review of World Energy June 2014. During that same period, BP reported that Qatar’s natural gas production, including natural gas produced for gas-to-liquid (GTL) transformation, only increased by 5.4% from 150.8 billion cubic meters to 158.5 billion cubic meters. Moreover, the government has extended through to 2015, at the earliest, its moratorium on further development of the North Gas Field while it considers options for maintaining the Field’s long-term output. This, therefore, remains a limiting factor in terms of production expansion to keep pace with rising domestic demand at least for the near future.
This makes the RasGas Barzan Gas Project (BGP) started in 2011 all the more critical in terms of Qatar’s strategic vision to increase gas production capacity to ensure continued economic development over the coming years. The Barzan megaproject includes both new offshore and onshore facilities, such as three offshore wellhead platforms, subsea pipelines, a gas processing unit and a natural gas liquids (NGL) recovery unit. At the beginning of September 2014, the company announced that Train One of BGP was more than 95% finished with a view to starting production in 1Q2015. Train Two is set for completion around mid-2015, and together Trains One and Two will produce approximately 1.4 billion standard cubic feet a day (bcfd), of sales gas to add to the local market. This additional supply will have a positive effect for both power stations and downstream industries.
Qatar’s oil exports were worth $62,519 million to the country in 2013. In the government’s budget for the 2012-13 fiscal year, $65 was the projected per barrel price for oil exports. In fact government revenues were given an unexpected boost when the average turned out to be nearer to $110 per barrel over that period according to EIA data. Having said this, Qatar remains a modest producer and exporter of oil when compared to its fellow OPEC members. Qatar currently has 511 producing wells, down six from 2012 levels. And in terms of crude oil production, in 2013 Qatar came in at 11th place out of the 12 members with 724,000 barrels per day (b/d), ahead of only Ecuador. Overall, Qatar’s crude oil exports last year were 599,000 b/d, just ahead of Libya on 589,000 b/d. By comparison, OPEC’s leading oil producer and exporter in 2013 was Saudi Arabia with 9,637,000 b/d and 7,571,000 b/d, respectively.
Future exploration in Qatar is likely to be more reliant on enhanced oil recovery (EOR) techniques as the State faces the issue of aging fields. The last big oil discovery was the Al Rayyan Field in 1994, and at present over 85% of the country’s crude capacity is coming from three mature fields. The first is Al Shaheen where production started in 1994, and which still accounts for 40% of Qatar’s daily oil production at 300,000 b/d. The other two key fields are Dukhan Field, which was first drilled at the end of the 1930s, and Idd El Shargi where production began in the 1960s. Despite the issues associated with maturing fields, the Qatar National Bank projects that crude oil production will continue to rise up to 800,000 b/d by 2017. Qatar Petroleum’s $6.6 billion four-year development plan that has been underway since 2010 is a major driver in this context.
TAKING THE TALENT OVERSEAS
Qatar’s energy talents have also been courted in the international arena in 2014. In July, Mark Simmonds the UK’s Minister for Africa and International Energy at the Foreign and Commonwealth Office, visited Doha to discuss international energy issues amongst other topics. Currently around 96% of the UK’s LNG imports come from Qatar meaning the countries understandably maintain close relations in this sphere. During his visit, Simmonds voiced the opinion that “Qatar has a significant expertise in the energy field and a particular desire, both to develop energy capacity and invest in energy.” He then went on to suggest that Qatar and the UK could usefully combine their expertise to assist in Africa’s hydrocarbon sector development, as reported by the Gulf Times. Undertaking this type of work in Africa would clearly open up a substantial, if untested, new investment angle for Qatari energy interests for the future.
In particular, Qatar Petroleum International (QPI), the foreign investment arm of Qatar Petroleum that was set up in 2006, has a mandate to “represent Qatar outside the State of Qatar by investing in projects worldwide to gain a long term financial return.” Currently, it has investments in various upstream, downstream, and LNG receiving terminal activities including some based in Asia (Singapore and Vietnam), Europe (Italy and the UK), and the US (Texas). However, in 1H2013 QPI announced its intention to put on hold for the time being, its plans to invest in the Yamal LNG Project in Russia, perhaps due to issues over gas exporting rights, according to Reuters. With this significant project off its drawing board for now, perhaps QPI might turn its sights to African energy investments as suggested by Simmonds, especially as other rising LNG players, such as Australia and the US, start to eat into Qatar’s traditional areas of dominance.