Qatar is well placed to become world’s largest exporter of LNG

The world knows that oil and gas sector projects have long gestation periods. That they take decades for execution. So when Qatar contemplated a massive thrust on gas projects a few years ago, few expected gains in the short term. Few understood the visionary initiatives. Few remembered that man’s dedication can change even destiny.
Yes, Qatar is a tiny country that has seen miracles in the sector. In just a few years after taking over as the energy minister in September 1992, Second Deputy Premier and Minister of Energy and Industry HE Abdullah Bin Hamad Al Attiyah brought about revolutionary changes in the entire oil and gas industry of the country by implementing the directives of HH the Emir Sheikh Hamad Bin Khalifa Al Thani with full support of HH the Heir Apparent Sheikh Tamim Bin Hamad Al Thani.

Today Qatar is well placed to become the world’s largest exporter of LNG -- Doha plans to nearly triple its present annual production of about 14 mm tons to 40 mm tons by 2010. It is poised tobecome the world capital of Gas To Liquids or GTL. What is more impressive, Qatar’s gas revenues are expected to exceed those of crude oil in the next 10 years. That is more than a decade ahead of 2025 when the existing oil reserves of the country might be depleted.
"In a matter of five years, two of the world’s top grassroot LNG plants were operating in Ras Laffan along with a state-of-the-art port to handle the export of the LNG produced from QatarGas and RasGas, Qatar’s two LNG jewels," Al Attiyah has said.

As a result of such accomplishments, accomplishments, LNG exports zoomed 400 % in just five years. The short span in which the dramatic results have been achieved becomes crystal clear if one considers the fact that the first LNG shipment left Ras Laffan Port on the Al Zubarah as late as in December 1996.
Knowledge. Dedication. Drive. Spirit of excellence. Bundling all of them into the vision, guidance and leadership of the Emir, Al Attiyah has been ensuring that the gas sector surges ahead.
"On the energy map, Qatar is the smallest member of Organisation of Petroleum Exporting Countries and will continue to be the smallest," he has said. "But looking at gas, Qatar holds huge reserves."

Qatar ranks as the world’s third biggest holder of natural gas reserves (900 tcf) after Russia and Iran. At the present rate of utilisation, the North Field reserves are expected to last another 100 years. The North Field boasts the world’s largest single reserve of non-associated gas. As gas monetisation continues, the country’s economy has bounced back with double-digit growth figures defying hardnosed predictions.
And its "per capita income levels, at close to $ 30,000, are already the highest in the region".
"Thanks to natural gas, Qatar has one of the fastest-growing economies with one of the highest per capita incomes in the world," says the LNG 14 Handbook.

If those numbers make one drool, the future has a great deal more in store. One look at the investments would give a peek at the mesmerising future. To utilise the huge gas reserves, a $ 60 bn investment would be made in the North Field development projects and gas-based industries in Qatar up to 2010.
This is more than four times the investment -- of $ 14 bn -- made in the North Field and the gas industry since 1990. Generating such staggering investments has been rather smooth for Qatar, thanks to the spotless investment climate built with painstaking efforts.

Several foreign investors say that Qatar lays "the smooth path to progress" in the oil and gas sector. Considering the large number of gigantic projects since 1992, it must have been quite a challenge to create the image in the investing world -- and then live up to it year after year.
"The stamp of confidence is verified by the leading international credit agencies by upgrading the sovereign rating of Qatar to A+," Al Attiyah has said. "In order to achieve our objectives in developing our oil and gas resources, we have adopted an open-door policy towards foreign partners that possess modern technology, financial capabilities and marketing outlets."

Huge investments would also be necessary in LNG importing countries to create receiving terminals and facilities. As the importers are lagging behind the exporters in creating such infrastructure, concern has been voiced at the highest levels. In some countries, there has been opposition to the creation of such infrastructure in ‘their backyard’. However, with the growing recognition of LNG as an eco-friendly fuel, such opposition is on the wane.
"Demand for gas is increasing and forecast to grow at a higher rate than oil over the next two decades," according to Pipeline Dubai. "The importance of power generation as a market for gas is also encouraging companies to become involved in both gas and power utilities."

In the last couple of years "we’ve seen a surge in demand which has exceeded all our expectations," QatarGas Vice Chairman and Managing Director Faisal Mohammed Al Suwaidi has said. "We knew that gas demand would pick up some time in the future but we did not expect this sudden increase, especially from countries like the UK and the US."
Several companies are excited about the US demand projection. They are keen on creating facilities and the required infrastructure in Qatar so that LNG exports to the US can begin at the earliest. ExxonMobil hopes to complete its two-train 15.6 mm tpy RasGas II expansion by 2008 or 2009. So does ConocoPhillips with its single train 7.5 mm tpy.

QatarGas III venture
Qatar continues to widen its reach. "South Korea and Japan remain the key LNG buyers although Qatar has broadened its customer base with France, Turkey, India, Italy, Taiwan, Spain and Abu Dhabi also signing up," according to a book brought out by the World Petroleum Congress 2004. Qatar has also signed several GTL agreements besides the $ 3.5 bn Dolphin project, which will provide gas to the UAE and Oman by way of pipelines.
"The emergence of vast markets in countries like China and India as well as the promise of new markets in Europe and North America and a growing global resource and reserves base should provide all of us with the opportunity to realise the full extent of the potential based on sustained commitment to safety and innovation that has become the trademark of the LNG industry worldwide," LNG 14 Steering Committee Chairman Hiroshi Urano has said.

As the LNG markets spread far and wide, pricing continues to be a major issue. The Second Deputy Premier has been urging consuming countries to put themselves in the shoes of LNG producers. There is also a debate as to whether or not pricing should be linked to oil prices. Some prefer linkage, others argue against it. As confusing signals emerge in this regard, the LNG world seeks rock-solid stability on the pricing front so that investors feel confident of making long-term investments.
This is no longer a distant dream considering the growing demand for LNG. Profitability is set to improve because of other factors as well. The sector has also seen a drastic fall in capital costs, thanks to technological improvements and increased efficiency.
"In the last 10 years, we have seen a 50 % cost reduction in the construction of LNG trains and, to a lesser degree, of LNG shipping," Al Suwaidi has said.

LNG 14 Programme Committee Chairman Dr Nirmal Chatterjee has summed it up thus, "The number of current and potential LNG projects has never been higher, the appreciation that LNG is a ‘green’ fuel when compared to other fossil fuels has never been greater, and the number of countries committed to LNG has never been more numerous."
In short, the demand for LNG is set to skyrocket with investors seeking a larger share in Qatar’s gas sector which would get bigger and bigger. And the economy would grow faster and faster, making Qatar richer and richer.

ExxonMobil in Qatar
ExxonMobil is one of the world’s premier petroleum and petrochemical companies. Along with its affiliate, it has operations in more than 200 countries,engaged in every aspect of the oil and gas business from exploration and production through pipeline transportation and shipping to refining and marketing.
The company participates in three major projects in Qatar. ExxonMobil is a 25 % shareholder in Ras Laffan LNG and a 30 % shareholder in RasGas II and RasGas Company. The company is a 10 % shareholder in QatarGas LNG. ExxonMobil is the developer of Al Khaleej Gas project (formerly Enhanced Gas Utilization project) which will be operated on its behalf by RasGas.

In June 2002, ExxonMobil and Qatar Petroleum signed a Heads of Agreement (HoA) to establish the QatarGas II joint venture, in which ExxonMobil will hold a 30 % interest. The new project will supply 15.6 mm tpy of LNG from Qatar to the United Kingdom and worth Europe for 25 years. This is a landmark achievement for Qatar, as it signals the first LNG import to the UK in 20 years.
In October 2003, ExxonMobil crowned its relations with Qatar by signing another HoA for the supply of 15.6 mm tpythrough RasGas II. This is the largest LNG import project in the history of the industry, and is considered a milestone in ExxonMobil’s cooperation with Qatar Petroleum. ExxonMobil is also in discussion with Qatar about a world-scale GTL project at Ras Laffan Industrial City.

Qatar Petroleum
Qatar Petroleum (QP) is responsible for all phases of the oil and gas industry in Qatar. The principal activities of QP and its subsidiaries and joint ventures cover exploration, drilling, production operations, transport, storage, marketing and sale of crude oil, natural gas liquids, LNG, refined products, petrochemicals and fertilisers, and providing helicopter and financing services.
QP’s strategy of conducting hydrocarbon exploration and new projects is through Exploration and Product Sharing Agreements and Development and Production Sharing Agreements concluded with major international oil and gas companies.

In addition to its operations, QP carries out its activities through subsidiaries like Gulf Helicopters Company and Qatar Nitrogen Company, joint ventures like Qatar Liquefied Gas Company (QatarGas) and RasGas Company (RasGas) and other investments like Qatar Electricity and Water Company and Qatar Shipping Company.
Second Deputy Premier and Minister of Energy and Industry HE Abdullah Bin Hamad Al Attiyah, who is also the QP Chairman and Managing Director, has said QatarGas and RasGas are "Qatar’s two LNG jewels".

QatarGas
QatarGas plans to be the world’s leading LNG supplier. The company is owned by QP (65 %), Total (10 %) and ExxonMobil (10 %), Mitsui & Company (7.5 %) and Marubeni (7.5 %).
QatarGas’ current LNG capacity is around 7.2 mm tpy from three trains and is expected to exceed 9 mm tpy after the completion of debottlenecking process in 2005. The company has been selling LNG to Chubu Electric Company and seven other Japanese companies since 1997. The QatarGas LNG plant is located within Ras Laffan Industrial City about 80 km north of Doha.

RasGas
A major new milestone in the development of Qatar’s gas sector was reached on February 7, 2004, as the world’s largest and most technically advanced LNG train was commissioned at Ras Laffan. Train 3, which will supply much of the LNG contracted for under the Sale and Purchase Agreement with India’s Petronet, has significantly increased the total LNG production capacity of RasGas while achieving substantial savings in capital costs and no significant increase in manpower.
Commissioning of the plant was particularly significant for Ras Laffan Liquefied Natural Gas Company (II) which was established in 2001 as the owning company for Trains 3 and 4. RasGas II is a joint venture of Qatar Petroleum (70 %) and ExxonMobil (30 %).

Trains 1 and 2 have been developed by Ras Laffan Liquefied Natural Gas Company which has shareholders including Japanese and Korean companies as well as QP and ExxonMobil. Responsibility for providing a full range of project, operational and maintenance management services is in the hands of RasGas which was formed for this role in 2001 and began operations in July 2002.
The engineering, procurement and construction (EPC) contract for the onshore components of Train 3 had been carried out by a joint venture of Japan’s Chiyoda and Mitsui & Company, Italy’s Snamprogetti and Al Mana Trading of Qatar, while the contract for the platforms and pipelines was executed by J. Ray McDermott Middle East based in Dubai. The companies are also carrying out work on Train 4.

Ras Laffan Industrial City
Ras Laffan Industrial City (RLC) forms the heart of Qatar’s natural gas industry, and will soon be home to a number of other industries and downstream developments. RLC is a trend-setting example of the way in which industrial development and environmental protection can co-exist.
QP manages and operates the 106 sq km RLC. The strategic plan for natural gas utilisation through the development of North Field has resulted in the construction of the city along with a modern port. RLC accommodates Ras Laffan Port, QatarGas and RasGas LNG plants.
Ras Laffan Port is considered one of the largest LNG export facilities in the world. The 8.5 sq km port cost more than $ 1 bn and became fully operational in 1996 with a LNG export capacity of 30 mm tpy.