Qatar gas projects market slumps

05 September 2012

Qatar gas market to remain slow until state moratorium on new contracts is lifted in 2015

Qatar’s gas industry has become the envy of the world over the past decade as its huge reserves and liquefied natural gas (LNG) facilities helping it become the world’s fifth-largest producer.

Output increased from just 27 billion cubic metres in 2011 to 146.8 billion cubic metres last year to surpass regional gas heavyweights Saudi Arabia and the UAE, and making the small Gulf state the richest per capita country in the world.

Qatar gas project EPC awards

Qatar’s gas investment has slowed since the middle of the last decade. In 2005, the government decided that the natural gas reserves in its North Field – the largest in the world shared with Iran – were being developed too quickly, and placed a moratorium on new gas developments that could be lifted in 2015.

Doha has turned its attention towards construction and is gearing up for a $60bn-plus boom led by Qatar’s selection as the hosts of football’s Fifa World Cup in 2022.

Since the moratorium was enforced, Qatar’s gas projects sector has been relatively quiet, with just 15 major projects worth more than $50m awarded since 2009, according to regional data tracker MEED Projects.

Contracts totalling only $480m are forecast to be awarded for the whole of this year, down from $3.4bn in 2011. Next year is only expected to see a marginal pick up, with $830m anticipated in engineering, procurement and construction (EPC) contracts.

The biggest projects in the pipeline are part of the Barzan Gas Project, Qatar’s last major upstream scheme at the North Field. Project operator RasGas, a joint venture between state-owned Qatar Petroleum and US oil major ExxonMobil, and is aiming to produce 6.2 billion cubic feet a day (cf/d) over three phases.

Japanese firm JGC Corporation won a $1.7bn EPC contract for the phase one Barzan gas processing trains in 2011, while South Korea’s Hyundai Heavy Industries was awarded an $800m contract on the offshore section.

The largest contract expected to be awarded in 2013 is the Barzan phase two offshore section for an estimated $700m, but this will not be tendered until April next year at the earliest.

The main Qatar gas project to be awarded this year will be Dolphin Energy’s export gas facilities upgrade for an estimated $250m. In early August, it emerged that India’s Larsen & Toubro is the frontrunner for the scheme. A decision is expected to be made in early September.

The Qatar gas market will be slim pickings for contractors in the Middle East until the government’s moratorium on new deals expires. But if new gas export projects are approved by the government post-2015, Qatar could see another boom in investments in the most critical sector of its economy.

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