Qatar Has World in Its Sights for Power Projects
By DANIA SAADI
Published: December 4, 2011
DUBAI — From the Arctic to Latin America, Qatar is scanning the globe for multibillion-dollar energy investments in hopes of diversifying its income and vastly expanding its international energy reach.
Qatar’s eagerness to expand abroad is driven by the kingdom’s robust foreign policy, a moratorium on new projects in its single biggest gas field, and a desire to protect itself from fluctuating demand and prices for natural gas.
Having achieved its goal of producing 77 million tons of liquefied natural gas a year, Qatar — the world’s biggest L.N.G exporter — is looking at projects in places like Russia and in industries like electricity, while increasing investments in high-consuming markets in Asia.
Analysts say the Qatari drive to diversify abroad is unlikely to ease because it is expected to stick to its moratorium on new projects in its North Field, the world’s biggest single gas reservoir, which Qatar shares with Iran.
In fact, the kingdom has said it will not lift the ban until at least 2013. Qatar imposed a moratorium in 2005 for fear that rapid production could damage the reservoir. Although Qatar holds the world’s third-largest gas reserves, after those of Russia and Iran, nearly all of them are in the North Field.
“If it doesn’t have the domestic resource to be able to expand its production, it has to look beyond its border,” said Julian Lee, senior energy analyst at the Center for Global Energy Studies in London. “That’s why it is looking to become a much more international player than purely a local one, and that’s what’s behind the interest in potential projects in Russia, Australia and growing investment in China.”
Qatar’s policy of having stakes in various energy sectors and cooperating with rivals echoes its political approach of having good ties with friends and foes.
Qatar has expressed an interest in acquiring a stake in the Russian gas producer Novatek and its Arctic Yamal L.N.G. project, which would be the first Qatari foray into an L.N.G. production facility beyond its borders.
Investment in that project would also turn the two gas rivals into co-investors, at a time when Russia is ramping up its L.N.G. output with an eye on Asia, while Qatar is counting on growth in Asian demand to offset a drop in L.N.G. exports to other markets, notably the United States.
An increase in U.S. production of unconventional gas has thwarted Qatar’s ambitions in the United States, the world’s biggest oil consumer. Qatar had so much faith in the U.S. market that it even invested in an L.N.G. regasification terminal there.
Meanwhile, Qatar is vying with Russia over Europe, whose debt crisis could threaten demand for L.N.G.
The Russians “have a very strong foothold in the Europe gas market and they are feeling competition from the Qataris,” said Samuel Ciszuk, a global oil supply consultant at the energy advisory firm KBC. “There is a benefit for having closer cooperation and some exchange of strategic goals and information with Russia, especially when you have such a big foothold in the market they have a foothold in.”
Closer ties with Russia began to emerge last year. Gazprom, the state-owned Russian gas giant, said last year that it had been invited to participate in Qatar’s L.N.G. industry once the moratorium on the North Field was lifted.
Both countries are members of the Doha-based Gas Exporting Countries Forum, a club of producers that share information on markets and projects. Russia and Qatar will be eager to align their gas policies in order not to undermine prices, which have taken a beating since 2008 with the onset of the global recession and a surge in North American gas output from shale rock.
Qatar is wary not only of Russia, but of the rising might of Australia, which is expected to dislodge the Gulf state as the world’s biggest L.N.G. exporter toward the end of the decade. This may even prompt Qatar to look at investing in Australia.
“Qatar has a choice between being a partner in projects that will compete with Qatar’s own L.N.G. production, or it can see those projects go ahead on their own without Qatari involvement,” said Mr. Lee of the Center for Global Energy Studies.
Involvement in international L.N.G. ventures would be less risky than undertaking new projects in Qatar and creating a gas glut that would depress prices.
But analysts say one big impetus for Qatar to expand abroad rather than expand locally by removing the North Field ban may be its desire to placate Iran. Tehran has struggled to tap its side of the reservoir because of a shortage of technology brought about by ever-tightening international sanctions over its nuclear program.
Qatar and Iran have “straws in the same gas field, but only Qatar is sucking,” said Eckart Woertz, a visiting fellow at Princeton University. “It must be a worry for the Iranians that Qatar has built the largest L.N.G. plants on the planet when their side of the field is still not developed.”
The fact that relations between Shiite Muslim Iran and the Sunni Muslim Gulf states are on edge does not help.
Saudi Arabia and Bahrain have hinted of Iranian involvement in Shiite protests on their home turf this year, a charge Iran has denied. The Gulf region is not immune to the flaring of conflicts over energy resources. Saddam Hussein used the pretext of Kuwaiti siphoning of Iraqi oil from a disputed field to invade the Gulf state in 1990.
Qatar, though, has managed to maintain good relations with Iran, and President Mahmoud Ahmadinejad was expected to attend a meeting of the gas forum in November, though in the end he did not.
Peace with Iran is also necessary to maintain the safety of Qatari L.N.G. tankers traversing the Strait of Hormuz, the world’s most vital energy channel.
Most recently, Qatar’s political involvement in Libya, where it helped arm the rebels and even marketed oil produced in areas held by the rebels, has led to speculation that Qatar is interested in being more than just a peacemaker.
“Certainly playing a wider political role internationally has been important for Qatar,” Mr. Lee said. “How much is that driven by the commercial consideration and how much it is driven by broader political concerns within Qatar is unclear.”
He added: “There is a lot of good feeling in the new government circle in Libya toward Qatar and that may well translate into upstream contracts” and some kind of marketing relationship with Libya.
Although analysts caution that it is too early to tell if Qatar will reap the benefits of its Libya gamble, the country’s huge energy reserves and proximity to Europe could prove helpful to Qatar in the future.
With or without Libya, Qatar’s energy tentacles are still expected to aim for new corners.
This year, Qatar bought a 6.2 percent stake in the Spanish utility Iberdrola, giving it access to European power markets, big wind-power projects and the potential to tap high-growth areas like Latin America, where Iberdrola has acquired a Brazilian power distributor.
Qatar also signed an initial agreement with local Chinese authorities, the Chinese state-run oil company C.N.P.C. and Royal Dutch Shell to be part of a petrochemical and refining complex in China, the world’s second-biggest oil consuming nation.
Posted on Dec 14th, 2010 with tags 77, Achieving, asia, Capacity, Celebrates, LNG, MTA, News, Production, Qatar.
At an official ceremony yesterday, the State of Qatar celebrated achieving 77 million tonnes per annum (Mta) of liquefied natural gas (LNG) production capacity, reconfirming the country’s position as the world’s leading producer of LNG with the largest production capacity – by far. This momentous feat realises the vision of His Highness, the Emir of the State of Qatar, Sheikh Hamad Bin Khalifa Al Thani, who set the target for the end of 2010.
The 77 Mta Celebration Event, which was the State’s highest profile energy industry event this year, was held at Ras Laffan Industrial City under the patronage and presence of His Highness the Emir of the State of Qatar, Sheikh Hamad Bin Khalifa Al Thani, and was hosted by His Excellency Abdulla Bin Hamad Al Attiyah, the Deputy Premier and Minister of Energy and Industry, and Chairman of Qatar Petroleum.
Some 1200 VIP guests from around the world, including the 23 countries to which Qatar currently exports LNG, attended. The guest list included local and overseas ministers, industry leaders and senior executives from the world’s leading energy companies, as well as contributions from the world of art, media, entertainment and sport.
His Excellency Abdulla Bin Hamad Al Attiyah said, “I would like to congratulate His Highness the Emir, Sheikh Hamad Bin Khalifa Al Thani and the people of the State of Qatar on this momentous occasion which demonstrates Qatar’s growing role in delivering LNG to the world.”
“The State of Qatar promised to realise the vision of His Highness the Emir for Qatar to reach LNG production capacity of 77 million tonnes of LNG per annum by the end of 2010. This milestone brings to fruition years of investment in infrastructure and expertise which has enabled us to go from zero to 77 Mta in a mere 14 years. Qatar today has invaluable credentials as a key innovator in the global LNG market, with a reputation for delivering LNG to global markets safely, reliably, and efficiently,” he added.
Sheikh Khalid Bin Khalifa Al Thani, Chief Executive Officer, Qatargas, said, “Qatargas is very proud to be able to make a significant contribution towards realising His Highness the Emir’s vision for the State of Qatar to achieve 77 Mta of LNG production capacity by the end of 2010. Since delivering our first LNG cargo 14 years ago, Qatargas has followed a remarkable, well planned course of growth and expansion, thanks to the guidance and support from His Excellency the Deputy Premier and Minister of Energy and Industry, Abdulla Bin Hamad Al Attiyah.”
“Today’s celebration underlines Qatar’s position as the world leader in LNG. Qatar has an important role to play in the energy security of countries across the globe to which we deliver and we are committed to delivering our LNG to customers safely and reliably. On this historic occasion, I would like to thank and congratulate the employees of Qatargas for their contributions towards this achievement. I would also like to thank all our shareholders for their support. Our thanks are also due to all our contractors involved in the construction and maintenance of our facilities,” he said.
Hamad Rashid Al Mohannadi, RasGas’ Managing Director said, “Reaching 77 Mta of LNG production capacity by the end of 2010 is a defining moment in Qatar’s history as a gas producing and exporting nation and RasGas is proud to have played a significant role in this success. As we developed our industrial infrastructure, as we increased our production capacity, and as we grew our business in markets around the world, we were guided by the overarching vision of His Highness the Emir of the State of Qatar, Sheikh Hamad Bin Khalifa Al Thani and steered wisely, year by year, by His Excellency Abdulla Bin Hamad Al Attiyah, Deputy Premier and Minister of Energy and Industry.”
“RasGas – and Qatar – has proved itself to be a secure, reliable supplier of LNG, with an excellent record of delivering projects on budget and on schedule. I would like to take this opportunity to thank our Board of Directors, shareholders and RasGas employees, as well as our customers and contractors, for their continued support and dedication to making Qatar’s 77 Mta production capacity a reality,” he added.
Rex W. Tillerson, Chairman and Chief Executive Officer of Exxon Mobil Corporation said, “Qatar’s visionary leadership and the remarkable story of its natural gas development are truly an inspiration for the world.”
Jim Mulva, Chairman and Chief Executive Officer of ConocoPhillips said, “ConocoPhillips is proud of our participation in the Qatargas 3 project. It increases our company’s global LNG output, while contributing to Qatar’s achievement of reaching total LNG production capacity of 77 million tonnes per annum. During the five years of development work, we have enjoyed the opportunity to establish close, collaborative relationships with Qatargas, Qatar Petroleum and the people of Qatar.”
Peter Voser, Chief Executive Officer of Royal Dutch Shell plc said, “Through being shareholders in Qatargas 4 and our contributions to Qatargas Operating Company and Nakilat, Shell is proud to play its part in supporting Qatar in this achievement which brings more natural gas, the cleaner-burning fossil fuel, to more people around the world.”
Christophe de Margerie, Chief Executive Officer of Total, said, “Total is honored and proud to be associated with Qatar’s LNG development from the very outset and to share this unbelievable adventure with our Qatari partner.” HE Al Attiyah added, “The 77 Mta achievement is a very significant moment in Qatar’s history and none of this would have been possible without the visionary leadership of His Highness The Emir who envisioned the transformation of the Ras Laffan area into Ras Laffan Industrial City, which is today the largest LNG export hub in the world.”
Abdulaziz Al Muftah, Director, Ras Laffan Industrial City, added, “This is a great achievement which makes the vision of His Highness the Emir Sheikh Hamad Bin Khalifa Al Thani a reality. It has been possible through the leadership and support of His Excellency Abdulla Bin Hamad Al Attiyah, Deputy Premier and Minister for Energy and Industry, along with the commitment of each individual in Qatar Petroleum, Ras Laffan Industrial City, RasGas and Qatargas. Ras Laffan, since its inception, has been developed as the hub of the gas industry in Qatar. It has world class infrastructure, facilities, utilities and services. Ras Laffan Port is the world’s largest LNG exporting facility. I believe that this a glorious moment for Qatar, its people and the energy industry and will provide a bright and prosperous future for generations to come.”