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Weekly UpdatesQatar has switched to natural gas for its domestic energy and industrial sectors. The share of gas in local energy and industrial consumption now accounts for more than 80%, up from zero in the early 1970s. Qatar's economy is performing extremely well, having had since 2000 impressive surpluses in its annual budgets, balances of payment and balances of trade.
Of the six GCC states, only Qatar in 2009 is expected to continue to post a budget surplus, helped by long-term contracts to export LNG to Asia and Europe. Qatar should report a healthy fiscal surplus this year.
Qatar had a financial crisis in the second half of 1995, because the coup had caused the emir's ousted father Shaikh Khalifa to seize the state's overseas funds worth billions of dollars. But this did not cause Doha to freeze its projects. Instead, downstream JVs with IOCs were speeded up and the government's share of investments was financed by the foreign partners - led by Mobil (later ExxonMobil - and contractors as well as export credit agencies and international banks.
Most of these projects have come on stream and include new plants producing petrochemicals, methanol and oxygenates, steel other items for export. Soon there will be a huge aluminium smelter and petrochemical mega-plants. Together with new upstream oil and gas operations and the huge LNG ventures, these projects have turned Qatar into a busy hub with big IOC capital flowing in.
In early 2005 the government launched a $7,000m five-year public works programme to modernise Qatar's infrastructure, making the emirate one of the biggest workshops in the world. State-controlled organisations from mid-1995 were authorised to borrow extensively and to speed up their expansions, with the help of foreign partners and banks. Mobil (now part of ExxonMobil) threw its weight into Qatar's gas sector, brought in big US contractors, and played a pioneering role in project finance (see background in Vol. 61, OMT No. 9 and down9QatrEnBasAug31-09).
Qatar, still the fastest growing economy, has become one of the busiest drilling centres in the world. As world crude oil prices have risen several times since their low of $9/b in early 1999, thanks to OPEC's price defence move in March of that year, upstream activities in Qatar have picked up. The collapse of paper WTI in the fourth quarter of 2008, down from a peak of $147.27/b on July 11, caused Qatar to be cautious in the first few months of 2009; but now Qatar is comfortable with paper WTI moving within a range of $65-74/b.
Qatar's annual export income since 2000 has been way above the 1994 level, with a big jump having occurred from 2004 and through to mid-2008. The state repaid its pre-2003 debts before 2007. In 2002, about 80% of QP's cash-flow came from crude oil exports. By 2012, less than 40% will be from oil, with over 60% to come from LNG, LPG, GTLs, condensates, petrochemicals, aluminium, steel and other industrial exports.
The prospects for finding new oil have improved, thanks to the geology in Qatar's territories and to IOCs which apply the most advanced technology in exploration.QP, bringing in IOCs as partners, with the E&P incentives and PSAs improved, has a two-pronged upstream strategy:
To develop QP's producing oilfields and boost their recovery factor at high speed through re-exploration and advanced EOR systems, with IOCs being PSA partners. These fields had 1.6 bn barrels of proven oil reserves in mid-1999. Now their reserves are much higher. Occidental Petroleum (Oxy) in mid-1994 was the first to sign a PSA for this set of fields, operating the offshore Idd al-Shargi North Dome. It raised its capacity from 20,000 b/d to 127,000 b/d in 2006. Oxy has developed the adjacent Idd al-Shargi South Dome for a sustainable capacity of 17,000 b/d, under another PSA. Similar PSAs for QP fields will be expected in the coming years, when their reservoir pressure will decline and the fields will need expensive EOR systems.
To develop and further explore oil finds made since the 1970s. The proven reserves of this category of fields had 2.6 bn barrels, according to QP in mid-1999 (which then was called Qatar General Petroleum Corp). Three of QP's IOC partners are producing crude oil. They are led by Maersk of Denmark, by far the most successful operator. To find new oil and gas reserves at top speed, QP has invited the biggest number of IOCs possible to be involved in bidding for new E&P blocks.
Now Qatar's proven recoverable oil reserves are estimated at 27.3bn barrels, a huge rise from 15bn barrels in 2007 and 4.7 bn barrels in 2000 - and should rise by 30-40% in the next decade. Recoverable reserves of natural gas exceed 900 TCF. Qatar's gas-based projects and domestic gas use will take more than 175 TCF of these reserves over the next 25 years.
Thanks to his success in Qatar, Jakob Thomasen, head of Maersk Oil's unit in Qatar since 2004, was in the second week of August 2009 promoted to CEO of the group. He will succeed Thomas Thune Andersen, who resigned earlier in the month. Thomasen, who turned Maersk/Qatar into one of the most successful foreign oil firms in the Middle East, was to take up his top post in September.
Thomasen has managed Maersk's offshore al-Shaheen oilfield development, with this field having begun production in 1994 and this rose to 60,000 b/d in mid-June 1997. A $5bn project is to boost the field's capacity to 525,000 b/d by end-2009, from 240,000 b/d in 2006.
The other producers in this category are Total of France, which has a capacity of 80,000 b/d, and Oxy in al-Rayyan field which has a capacity of 70,000 b/d (see profiles of Qatar's fields in Part 2 - with operations of the IOCs covered in gmt10QatrFieldsSep7-09).
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