QATAR - Qatar's Energy Base.

The fastest growing economy in the world, Qatar has invested over $25 bn in its energy sector to end-2007 - with the emirate's energy base dependent mostly on natural gas. Domestic energy consumption in 2007 is to average about 15.3m t/y of oil equivalent, up from 13m t/yoe in 1993. A major part of the investment has flown from foreign firms, with ExxonMobil in the lead. By 2015-17, non-oil ventures involving foreign partners will provide about 40-50% of Qatar's annual budget.

Qatar's energy base is small. Oil consumption is averaging about 50,000 b/d, up from 10.500 b/d in 1985, with gasoline accounting for nearly 50%. Natural gas accounts for more than 85% of its energy and industrial consumption, excluding gas being exported by pipeline and in LNG and NGL forms, up from zero in the 1960s. This share is set to grow as the industrial sector expands and North Field gas development projects are completed. In a country where gasoline is cheaper to the state than water, oil accounts for less than 15% of total energy consumption.

Gas consumption, excluding gas injected into the oilfields and gas allocated for export, is in 2007 averaging 14.5 BCM/year (13.1m t/yoe), up from 11.6 BCM in 2003, compared to 1 BCM/year in 1970.

The Power Sector: The power sector and water desalination plants depend heavily on natural gas. Their combined consumption is over 380 MCF/day. According to the state-owned Qatar Petroleum (QP), this would rise to 420 MCF/day in 2010 - when total domestic gas consumption would amount to 850 MCF/day. Electricity demand has been normally growing by about 7% per annum, but since 2006 this has risen by 17%.

Qatari citizens, who account for 25% of consumers and 40% of consumption, continue to receive water and power free of charge, one main reason why demand for water and power has been rising rapidly. But Doha does not intend to make any major change affecting the Qataris, because the issue of water and power tariffs is politically sensitive. Instead, the government has set a monthly ceiling for household consumption by the Qatari nationals, under which the consumers are charged if their use of water and power goes above the limit.

Qatar's power generating capacity now exceeds 3,700 MW, up from 1,500 MW in 1995, with power demand averaging about 7% per annum. Most of this capacity is owned by Qatar Electricity and Water Co. (Kahraba), a 57% privately-owned joint stock firm created in 1998 to take over the running of the sector from a grossly inefficient ministry of electricity and water (MEW). The remaining capacity consists of power plants at the oilfields. Power generating capacity by 2010 should reach 9,000 MW and between 10,000-15,000 MW by 2015.

The MEW was in 2000 replaced by the state-owned Qatar General Electricity & Water Corp. (Kahramaa). Since then Kahramaa has sold its power and water desalination plants to QEWC. Kahramaa is to privatise its power and water transmission and distribution systems. A study on this has been made by Fichtner of Germany.

The first gas-fired independent water and power producing (IWPP) venture in Qatar started up in 2004 at Ras Laffan Industrial City. This, Ras Laffan Power Co. (RLPC), is a JV of AES of the US (55%), QEWC (25%), the state-owned Qatar Petroleum (QP - 10%), and the GCC's Gulf Investment Corp. (GIC - 10%). RLPC has a $720m complex built at Ras Laffan by Enelpower of Italy with a capacity of 750 MW of power and 40m gallons/day of water. RLPC's second phase, with 750 MW of power and 40m g/d of water, should be on stream later in 2007. There will be at least two other IWPPs before 2010 (see background in Vol. 61, DT No. 9).

Key project accords, including a 25-year power and water purchase agreement (PWPA), were signed on March 1, 2005 by Kahramaa and a group awarded the second IWPP in September 2004. The project company, Q-Power, is led by QEWC (55%). Its partners are the UK's International Power with 40%, and Chubu Electric Power Co. of Japan with 5%. The IWPP, located at Ras Laffan, will have a capacity of 1,025 MW of power and 60m g/d of water. The first phase went on stream in 2006. Full capacity will be operational in 2008. The plant is close to RLPC.

Kahramaa buys power and water from the IWPPs under 25-year PWPAs. QP is committed to supply the IWPPs with natural gas and sea water under long-term contracts.

The gas-fired Ras Abu Fontas B complex at Al Wusail, operating since late 1997, consists of a 625 MW power plant and a 33m g/d water desalination unit. It was built by Asea Brown Boveri, a Swiss-Swedish group, under a $1.1 bn contract awarded in January 1994. Ras Abu Fontas is linked to the national electricity network through a Doha transmission system, built in 1997 in a $717m project, which is the fourth phase of a new grid for the emirate. The transmission system was built by a European consortium led by Cegelec of France.

As the MEW was abolished in 2000, Kahramaa was formed under the chairmanship of Energy and Industry Minister Abdullah al-Attiyah. One of Kahramaa's tasks has been to improve efficiency in the power and water systems. The number of people employed in these systems has been cut from 8,000 to about 3,000. In charge of project planning and implementation, as well as the IWPP business, Kahramaa is lowering costs across the board (see Vol. 57, DT No. 9).