Oil sector starts to reawaken

29 May 2014

Doha is increasing oil activity, hoping to shield the country against the shale gas revolution

The US’ Occidental Petroleum (Oxy) has this week released the first packages at the $3bn Idd el-Shargi North Dome offshore oil field and three more are to be tendered shortly.

Oxy hopes to prolong the 100,000 barrel-a-day (b/d) production from the field, which has been in operation since 1963, for as long as possible. This can only be achieved by this type of multibillion-dollar investment.

The oil company has been operating the field since it signed a production-sharing agreement with Qatar Petroleum (QP) in 1994 and it is clear that Doha is happy with the job the firm is doing. When Oxy took over, the field was only producing 20,000 b/d.

The renewed vigour with which Qatar has embraced its oil assets has started to reinvigorate the Gulf state’s stagnant upstream projects market.

Contractors are now bracing themselves for a flurry of awards for Qatar’s oil fields. Doha has realised that keeping as diverse an energy mix as possible is now essential in an age where non-conventional supplies of oil and gas threaten to drive down hydrocarbons prices and cause oversupply in key markets such as the US.

The increased activity in Qatar’s oil sector does not necessarily mean that Doha plans to take similar steps with its gas assets. The moratorium on producing more gas from the North field, the world’s largest non-associated gas field, is still firmly in place and there are no signs that it will be lifted in 2014-15, as was originally planned.

QP seems content to extend the life of its oil fields and to invest in downstream schemes such as refining and petrochemicals. Contractors will be happy that a sector many had long forgotten about is now starting to reawaken.

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