QATAR - Qatari Pricing.

QP has a monthly pricing formula based on Oman crude's official selling price (MPM) for its Qatar Land and Qatar Marine crude oils. Its prices for these grades are set retroactively at a premium over Oman's MPM, which is an assessment of spot prices during the previous month.

In the past 11 years, QP's formula prices for the two crude oils have often come higher than their market value. This has led to a spot trade in the two Qatari crudes, which has at times been at heavy discounts to QP's official prices.

QP also takes into account the monthly price and premia adjustments of ADNOC for Abu Dhabi's crude oils which are set retroactively against the spot prices of Oman and Dubai crudes. QP raises the premium over Oman's MPM during certain months and lowers it through other months according to market changes. The premia over Oman MPM are high when the differential between Dubai and Dated BFO is narrow.

NGLs from the pre-1991 plants of Mesaieed, consisting mostly of LPG, are sold on term basis and priced at 50% of the value of naphtha CIF-Japan minus freight and 50% of the fob-Gulf value of naphtha plus a premium. The volume of Qatar's LPG exports is set to increase from 4m t/y now to about 14m t/y by 2012. This could make Qatar the world's biggest LPG exporter.

QP recently made Ali al-Hammadi CEO of its new unit - Qatar International Petroleum Marketing Co. (Tasweeq) - which will deal with the export marketing of LPG, sulphur, naphtha and condensate. Hammadi was previously marketing director at QP and CEO of QatarGas.

Tasweeq was created as part of a restructuring of QP's marketing units. Tasweeq will start operating on Jan. 1, 2008. A different QP unit will be created for the handling, storage and loading of other oil and gas products.

QP has started recruiting staff for new units and has appointed an Indian-based firm to source extra personnel.

The Qatari Logistics: Compared to its neighbours Abu Dhabi, Iran, Kuwait or Saudi Arabia, Qatar has had limited logistics for oil exports or marketing. But it is expanding rapidly in this respect, with QPI to invest in overseas refining and distribution systems for oil products.

QP and its IOC partners have built up impressive logistics for LNG exports. Together with its foreign partners, QP is investing in overseas LNG receiving and regasification terminals (see Gas Market Trends of this week). It has the world's largest LNG terminal at Ras Laffan which is being expanded to handle gas liquids and ultra-clean fuels from GTL ventures.

QP has two crude oil terminals, one at Mesaieed which is the main facility also handling oil products and condensate/NGL exports, and a smaller one on the island of Halul.

Crude oil from the onshore field of Dukhan is piped to the Mesaieed terminal. The terminal handles petrochemicals and steel exports. It has been partly upgraded, with new facilities handling exports of MTBE and new chemicals produced from late 2002. A new 24-inch seamless pipeline for crude oil has been built from Dukhan to Mesaieed. A new multi-products berth at Mesaieed has four crude oil tanks, with 60-metre diametre each, and one water tank for fire-fighting with a diametre of 33 metres.

Halul terminal, 80 km off Qatar's east coast, handles exports from the offshore fields of Idd al-Shargi, Maydan Mahzam, Bul Hanine and al-Khaleej. It has been upgraded and refurbished further in a project which has improved stormwater protection and increased berth handling capacity.

In a $17.8m project awarded in June 2001, the north quay and western breakwater have been refurbished and extended. There is a new 800-metre breakwater, a 75-metre steel-piled quay with concrete deck at the northern end of the breakwater, and a new seawater intake system, new sheetpiles and other facilities.

The Ras Abu Abboud terminal is for small quantities of gasoline, gasoil and ATF. The fields al-Shaheen and al-Rayyan, off the northern coast of Qatar, have crude oil export facilities through SBMs.

Ras Laffan terminal is to handle exports of petroleum products from the condensate refinery which is being built near the port. Ras Laffan is becoming a major industrial zone, to rival that of Mesaieed later on in this decade.

Shipping: The Qatar National Navigation and Transport Co. (QNNTC) has had two crude oil tankers with a combined capacity of 230,500 dwt. It has a products marketing subsidiary, Qatar National Bunker and Tank Services (QNBTS), which has owned one small tanker for oil products and smaller vessels for bunkering.

QNNTC also has tankers transporting polyethylene exports. It has doubled its fully cellularised container fleet to four.

The Qatar Shipping Co. (Q-Ship), set up in 1992 with operations started in 1994, has a fleet of tankers transporting crude oils, oil products, LPG, metals and iron ore. In addition, it has one tanker mainly used for loading fuel oils from Bandar Khomeini in Iran and discharging them at Red Sea and East African ports, and in Australia and the Far East. The fleet also shuttles to Halul terminal QP's share of crude oil being produced from al-Shaheen field.

Publicly traded and capitalised at about $275m, of which half is paid up, Q-Ship is owned 16% by QNNTC, 15% by QP and 7% by Qatar Steel Co. The other shareholders are Qatar National Bank, Qatar Insurance Co., and Qatar Islamic Bank. All are state-controlled companies. The rest is held by 252 founding shareholders.

Under a QR274m ($75.3m) order made on Sept. 26, 2000, Q-Ship in late 2002 received one of two 37,000 dwt tankers from Shina Shipbuilding Co. of South Korea. It received the second ship in early 2003. It received a third 37,000 dwt vessel from the same firm later in 2003. It has since bought FMX oil tankers, each exceeding 100,000 dwt. The vessels transport jet fuel, diesel, kerosine and petrochemicals, mainly for QP.

Qatar Mobil Tanker Co., a JV of Q-Ship and ExxonMobil set up in December 1999, owns two Aframax crude oil tankers servicing orders placed by QP.

Under two 10-year contracts, Halul Offshore Services Co. (HOSC), a 50-50 JV of Q-Ship and QNNTC, has provided QP with three standby safety vessels since early 2002 and four newly-built anchor handling and tug supply vessels since mid-2002.

Qatar Gas Transport Co. (Nakilat), established in June 2004, is to become the world's biggest carrier of LNG. Its fleet of up to 95 tankers of various sizes is to be leased to several LNG ventures emanating from each of the QatarGas and RasGas sets of projects (see Gas Market Trends of this week - gmt11QatrGasExpSep10-07).