Qatar's Energy Base.

The fastest growing economy in the world, Qatar has invested heavily in its energy sector which depends mostly on natural gas. Domestic energy consumption in 2009 is expected to average 17m t/y of oil equivalent, up from 15.3m t/yoe in 2007 and 13m t/yoe in 1993.

All the six Arab Gulf Co-operation Council (GCC) states except one - Qatar - face power shortages and budget deficits this year. Incredibly with their giant reserves, these countries, do not produce enough gas to meet their demand for electricity. Qatar is to have a very small budget deficit, from surplus in the previous years. It has a surplus of electricity for export to fellow GCC states.

Qatar's energy base is small. Oil consumption this year is to average about 62,000 b/d, up from 50,000 b/d in 2007 and 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.

Gas consumption, excluding gas injected into the oilfields and gas allocated for export, is in 2009 expected to average 17.6 BCM/year, up from 14.5 BCM/year in 2007, 11.6 BCM in 2003 and to 1 BCM/year in 1970. Among the suppliers to the domestic market is ExxonMobil, which has been providing 744 MCF/d since 2005 from its al-Khaleej Gas (AKG-1). And Exxon's AKG-2 in the second half of 2009 will raise the output to 2,000 MCF/d, also for the local market. These streams include lean gas and NGLs, such as ethane, propane, butane and condensate.

The gas from AKG-1 is used in both the Ras Laffan and Messai'eed industrial cities, meeting Qatar's need for power and providing feedstock for the world's largest gas-to-liquids (GTL) plant located in Ras Laffan. AKG-2 will supply sales gas to meet long-term domestic needs, as well as regional gas customers. AKG now has three customers, including QP which buys the gas for use in Messai'eed and resells it to QPower, Ras Laffan Power Co. and Oryx GTL. AKG has built facilities to supply fuel gas to the Ras Laffan Olefins Co. and Laffan Refinery and to handle LPGs recovered by the refinery since 2008.

The domestic market is also to be supplied from the Barzan gas field, a project under development by the state-owned Qatar Petroleum (QP) and ExxonMobil, which has been delayed for a few months. A new target date for production start-up is likely to be 2014.

To service the local gas market, QP is having a 211-km pipeline with associated stations and infrastructure to be ready in mid-2011 to carry 2,000 MCF/d of sweet lean gas from Ras Laffan to different consumers at Messai'eed. The project, known as Strategic Gas Pipeline, involves the installation of two 36-inch lines. This is the second of three major gas projects: a 140-km and a 25-km of carbon-steel pipelines and the construction of several booster stations within Ras Laffan Industrial City. The 211-km gasline will run in parallel to a Ras Laffan-Messai'eed ethylene pipeline.

The Power Sector: Qatar in September will have excess power capacity and is in talks with Kuwait about selling it electricity through a GCC grid. Energy and Industry Minister Abdullah al-Attiyah recently said: "The problem is the [GCC] grid cannot take more than 400-500 MW as transit". A $2.3bn power plant just built at Mesai'eed with a 2,000 MW capacity is to begin initial production in September, bringing in about 1,000 MW of extra power. This will raise Qatar's generating capacity to about 5,300 MW.

Qatar is having a $3.9bn power and water plant, the country's largest, under construction which will have a capacity of 2,730 MW when it is in full operation by 2011. The new plants will raise Qatar's power generating capacity to more than 9,000 MW in 2011.

The power sector and water desalination plants depend heavily on natural gas. Their combined consumption is over 400 MCF/d. According to QP, this would rise to 450 MCF/d in 2010. Normally, electricity demand has been 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. 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 a set limit.

Qatar's power generating capacity has grown from 1,500 MW in 1995. Most of the current 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 should reach up to 5,000 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 Kahraba. 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%), Kahraba (25%), 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 1,500 MW of power and 80m gallons/day of water. There will be at least two other IWPPs by 2012.

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 JV firm, Q-Power, is led by Kahraba (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, has a capacity of 1,025 MW of power and 60m g/d of water. The first phase went on stream in 2006. Full capacity became 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 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 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.

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