In 1997, the price of a barrel of crude oil was just $10 and developers were starting to doubt whether prices would ever reach the sort of levels needed to justify investment in additional capacity. Now, with oil breaking through $90 for the first time, analysts are boldly predicting $100-a-barrel oil before the end of the year. But Faisal al-Suwaidi, chief executive officer of Qatargas, is determined not to be swayed by oil price alone. ‘We will move more and more downstream,’ says Al-Suwaidi. ‘These are projects that get pushed aside or people do not talk about. Everyone is interested in upstream projects now because of the energy crisis or the price of oil. But there are a lot of important things happening at Ras Laffan and Mesaieed.’ For a tiny Gulf state that has quickly morphed into the largest LNG exporter in the world, the changing energy environment means having to balance huge demand for gas with difficulties in delivering projects on time and on budget. In the background are persistent gripes about how the country is managing its greatest asset, the vast North field. While its gas reserves, estimated at 900 trillion cubic feet (tcf), are the envy of the energy world and its profits ample, Doha has not been immune from a tight market for global contractors. In addition to cost inflation fears, concern is growing over whether the gas-rich state can deliver on its promise to become the LNG supplier to the world. The government placed a moratorium on new gas projects in March 2005, which has created ripples far and wide. Doha is playing a waiting game, content to ride out the speculation while its engineers work on an intricate study to help explain how the North field behaves and plot the next stage in its development. Al-Suwaidi is at the heart of the country’s hydrocarbons development. As well as his job at Qatargas, he is a board member of the state-run Qatar Petroleum (QP), and is in a unique position to reflect on the delicate position in which the country finds itself. He says high oil prices and the current clamour to secure supplies has led to undue speculation over the nature of the North field. ‘Originally Qatar planned [production of] 25,000 million cubic feet by 2020, but we will now reach that by 2010,’ he says. ‘Our reservoir engineers say we really need to study what that will do to the field. We know there is about 900 tcf in place, but we need to make sure this is produced on the most economic terms.’ While debate on the motivation behind the moratorium is likely to continue for some time (see box), the company is determined to keep its $30,000 million raft of projects on track, despite costs almost doubling over the past three years. Qatargas, the first of two main consortiums to develop LNG projects in Doha, recently launched a $1,200 million maintenance project to ensure the company continues to deliver 10 million tonnes a year (t/y) of LNG until Qatargas I closes in 2030 (MEED 19:10:07). A further expansion of Qatar’s Barzan gas development is also likely, with the second stage expected to double gas production from the North field for domestic consumption. But like many of its peers around the Gulf, the company is increasingly looking downstream to harness its hydrocarbons reserves. A study is under way at Ras Laffan to build a second train with capacity of 146,000 barrels a day (b/d) at its existing condensate refinery, but plans are also being considered to add a downstream aromatics unit. Crucially, however, Qatargas has tightened the reins on implementing new projects, preferring to add to existing infrastructure instead. Al-Suwaidi concedes that tight contractor capacity means mega LNG projects have come to a standstill. A few years ago, if Qatargas made a shortlist of 25 contractors, the majority would submit a proposal. But in 2007, he says, it would be lucky to receive more than two or three bids. ‘I would not start a project now simply because there are not enough engineering hours available unless you pay more money than you need,’ he says. There are external and internal factors that make you think again before embarking on mega-projects.’ Tight capacity is also affecting the demanding schedule laid out by Qatargas for its deliveries around the world. The start-up of one of the world’s largest LNG export schemes, the $12,000 million Qatargas II project, has been put back from the first quarter of 2008 to summer 2008. The project, with capacity of 7.8 million t/y, will export LNG to the UK, and represents a sizeable chunk of Doha’s plans to boost its output to 77 million tonnes in 2010. Al-Suwaidi admits a small delay was probably inevitable for such a complex project. ‘When I look at Qatargas II, I am looking at 40 wells, offshore platforms, a couple of sea lines, two trains of liquefaction and something like 14 or 15 ships, along with a terminal in the UK,’ he says. ‘It is a very long chain and some of those are ahead of schedule, some are on schedule and some are facing challenges. There is a huge shortage of skilled labour out there.’ Despite the difficulty of delivering Qatargas II on time, Al-Suwaidi maintains all other LNG trains are on schedule. ‘There are huge challenges putting pressure on the schedule, but all in all I think the contractors have really lived up to their reputations,’ he says. While Al-Suwaidi says Qatargas’ projects are ‘full up’ at present, the company’s shareholders, who include the US’ ExxonMobil Corporation and France’s Total, are keen to develop more projects after 2011. ‘We have a number of proposals from [shareholders] for further projects when the moratorium is lifted, so probably we look inactive in terms of new projects but really there are a lot of studies going on,’ he explains. There is a caveat, however. When the moratorium on the North field is lifted, the priority will go to local supplies so Doha can keep pace with its fast-growing power and desalination sectors. ‘Only when that gap has been lifted will we look to exports again,’ says Al-Suwaidi. With QP recently placing more emphasis on making strategic international purchases, Qatargas is also looking to expand its profile. The company is building three LNG terminals around the world, developing pipelines and creating standalone marketing companies. ‘We are moving more downstream than we ever thought just a few years ago,’ he adds. Regardless of which way it moves, the fortunes of Qatar’s gas industry are likely to occupy centre stage for some time yet, especially as the price of crude continues its march towards the unprecedented $100 mark.