Delays in oil and gas projects have been good for Doha

After five years of breakneck expansion, Qatar applied the brakes on some of its most high-profile oil and gas projects late last year.

Qatar Petroleum had become accustomed to dealing with large cost spikes when building its liquefied natural gas (LNG) facilities at Ras Laffan. The capital cost of building large downstream units, such as its LNG production trains, roughly doubled between 2003 and 2008.

But the state-run firm has correctly recognised that tumbling raw materials prices, sparked by the global economic downturn, give it an opportunity to negotiate cheaper deals on its major projects.

Other national oil companies in the region achieved average savings of 16.5 per cent on the price of construction contracts awarded in the first six months of 2009.

Qatar welcomed the chance to catch its breath. With more than 30 million tonnes a year (t/y) of LNG capacity due to come on line in the next 18 months, and global energy demand faltering, Doha has focused on delivering huge facilities such as Qatargas II.

QP's decision to press ahead with the implementation phase of the Al-Shaheen refinery and Barzan gas development suggests the firm does not expect prices to drop much further.

If it is successful in tendering these two projects within budget, Qatar may embark on a second wave of projects in 2010. That would be a significant boon for Qatar-based contractors that are struggling to find their next job.