Company snapshot

Date established 1974

Main business sector Oil and gas

Main business region Qatar

Chairman/managing director Mohammed bin Saleh al-Sada

Website www.qp.com.qa

Telephone (+974) 4 440 2000

Structure

Qatar Petroleum (QP) is responsible for developing Qatar’s vast oil and gas reserves. The state-owned company was formed in 1974 after the country’s hydrocarbon assets were nationalised. The chairman and managing director is the minister of energy and industry, Mohammed bin Saleh al-Sada.

QP has successfully used exploration and production-sharing agreements and development and production-sharing agreements with international oil companies (IOCs) to exploit Qatar’s hydrocarbons endowment.

Qatar natural gas proven reserves
Year end (Trillions of cubic metres)
1990 4.6
2000 14.4
2009 25.3
Source: BP

Its joint ventures with firms such as the UK/Dutch Shell, the US’ ExxonMobil and Norway’s Maersk Oil have helped transform the country into the world’s largest exporter of liquefied natural gas (LNG). Qatar exports 77 million tonnes a year (t/y) of LNG and about 1.5 million barrels a day (b/d) of oil. Hydrocarbon revenues are the mainstay of the country’s economy, accounting for 60 per cent of gross domestic product.

QP has a far-reaching remit that not only includes upstream oil and gas operations, but also covers petrochemicals, metals, financial services and real estate through its various subsidiaries and joint ventures.

Operations

QP is ultimately responsible for all hydrocarbon upstream activities, including exploration and production, transport and processing, and sales and marketing. Its main exports include LNG, crude oil, natural gas liquids (NGLs), refined products, petrochemicals and fertilisers.

Qatar natural gas production 
Year (Billions of cubic metres) 
2000 23.7
2001 27
2002 29.5
2003 31.4
2004 39.2
2005 45.8
2006 50.7
2007 63.2
2008 77
2009 89.3
2010 116.7
Source: BP

LNG is produced through two QP subsidiaries: Qatar Liquefied Gas Company (Qatargas) and Ras Laffan Natural Gas Company (RasGas).

Qatargas is the world’s largest single producer of LNG and has an export capacity of 42 million t/y. It transports gas from its offshore complex to four LNG processing trains located at Ras Laffan. QP has a 65 per cent share in Qatargas, with the remainder divided among companies that own shares of the separate processing trains. These include France’s Total, the US’ ExxonMobil and ConocoPhillips, and Japan’s Mitsui & Co and Marubeni Corporation.

RasGas is the second largest LNG producer in the world, with a production capacity of about 36 million t/y through seven trains. QP owns 70 per cent of the company and ExxonMobil owns the remaining 30 per cent.

The LNG is transported by Qatar Gas Transport Company (Nakilat), a joint stock firm in which QP holds a 5 per cent stake. Nakilat operates more than 50 LNG vessels under 25-year charter deals with RasGas and Qatargas.

QP’s other gas operations include the Dolphin Pipeline, which transports 2 billion cubic feet a day of gas to the UAE and Oman, as well as the recently commissioned $19bn Pearl GTL project also located at Ras Laffan.

Liquefied natural gas prices 
Year Price (US$ per million BTUs)
2005 6.05
2006 7.14
2007 7.73
2008 12.55
2009 9.06
2010 10.91
Source: BP 

Pearl GTL is the largest gas-to-liquids plant in the world and processes natural gas into clean-burning fuel for power stations. It was fully funded by Shell, but QP has a production-sharing agreement with the IOC.

QP’s crude oil production is on a far smaller scale than its gas operations, but is still significant in global production terms. The firm operates both onshore and offshore oil fields, mostly through production-sharing agreements.

QP’s other assets include a 50 per cent stake in the 585,000 t/y aluminium smelter Qatalum and 100 per cent ownership of the Qatar Refinery. It also owns a 70 per cent ownership of Industries Qatar, which has large stakes in Qatar Fertilisers Company, Qatar Steel and Qatar Petrochemical Company.

Ambitions

With the completion in 2010 of a decade-long push to build up LNG capacity and the recent commissioning of the Pearl GTL project, QP’s focus is turning once again to petrochemicals schemes. In December, it signed an agreement with Shell to develop a petrochemicals complex in Ras Laffan. The proposed facility will include a steam cracker, a 1.5 million t/y monoethylene glycol facility and a 300,000 t/y linear alpha olefins plant. Previously, QP had been in talks with three IOCs over potential petrochemicals projects, but after the state decided to impose a moratorium on further development at the North field, discussions were halted.

Qatar Petroleum oil production 
Year  (Millions of barrels)
2000 0.757
2001 0.754
2002 0.764
2003 0.879
2004 0.992
2005 1.028
2006 1.11
2007 1.197
2009 1.378
2009 1.345
2010 1.569
Source: BP

QP has stated in the past that it wants to be the world leader in GTL production, but the restriction on the North field also prevented this from happening. Once the moratorium is lifted, it is likely that a raft of petrochemicals and GTL projects will be launched. Space has been left available at the Pearl site in Ras Laffan for a further two trains to be built.

MEED assessment

QP is a progressive national oil company, open to forming close ties with IOCs. Its assets have increased so fast over the past decade that it has helped Qatar achieve annual growth rates of more than double those of China.

Now that the infrastructure is in place and with no plans to increase production on the North field until at least 2015, the short-to mid-term strategy for QP will be to focus on consolidation rather than growth.

In the long term, there could be some concerns within the company regarding the growing popularity of gas shale as a competing source of energy. However, exploiting gas shale is expensive, has high carbon emissions and is a relatively difficult process compared with the easy access QP has to huge natural gas reserves.

The firm should therefore be able to handle any threat from alternative gas sources, especially as key Asian markets move away from coal-burning power stations towards the cleaner natural gas liquids that Qatar can provide.

On top of its vast gas resources, QP has about 25 years of oil reserves left if it continues production at its current rate, and advancements in enhanced oil recovery may prolong them.

QP has diversified its business through joint ventures and affiliates. All of these businesses, especially in the metals sector, should grow as the 2022 World Cup preparations accelerate.

North field moratorium

In 2005, the Qatari government placed a moratorium on new developments on its North field, which is the world’s largest offshore non-associated natural gas reservoir, with estimated reserves of more than 900 trillion cubic feet of recoverable gas. The exploitation of the reservoir has been the most transformative period in Qatar’s history, raising the country to the ranks of one of the world’s richest nations.

In 2006, Qatar became the world’s largest exporter and trans-shipper of LNG, overtaking Indonesia, which had dominated the market for more than 30 years, with exports of up to 25 million t/y. In 2008, the country’s quarterly earnings from gas exports overtook those from oil exports for the first time. In 2010, Qatar’s LNG production capacity hit more than 77 million t/y.

Initially, the moratorium was expected to be in place for just a couple of years while the condition of the reservoir was studied, but now it is not expected to be lifted until 2015 at the earliest.

By then, scientists will be able to determine what impact the series of projects launched since 1991 has had on the field and whether it will be able to sustain a renewal of the LNG projects after the initial 25-year period expires.

There is no doubt that vast gas reserves are held in the offshore field, but it is not yet clear exactly where those deposits are situated and what the full geological make-up of the field is.

The caution is well founded as few other countries depend so much on one asset as Qatar does on the North field.

The reservoir is about 6,000 square kilometres in size and needs careful management. QP is currently calculating the best way to exploit the gas in the field and says it will only embark on a second wave of development when it is satisfied it can increase gas output from the field without damaging the potential of the reservoir.

Qatar has made it clear that it will not be rushed into making any decisions on further gas expansion, but as demand for energy increases, QP will be under pressure to supply customers with more LNG.

Global energy consumption is set to increase 25 per cent by 2030 and many countries are now looking to switch from using fossil fuels with higher carbon emissions, such as coal, to using cleaner fuels, such as natural gas.

Another factor that may accelerate new developments is the 2022 football World Cup. Qatar needs to spend about $60bn on increasing its infrastructure as well as building the facilities it will use to host the event.

This means that heavy industry in Qatar will require more gas feedstock and power stations will see huge increases in demand as hundreds of thousands of workers descend on the country to help with construction.

As demand for energy increases, QP will be under pressure to supply customers with more liquefied natural gas

The North field contains more than 14 per cent of recoverable global gas reserves and Qatar wants to ensure that future generations are left a legacy that will last for the longest possible period at maximum production levels.

When QP has finished its study into the geological make-up of the field, it will feel confident that it can then work towards putting additional infrastructure in place that will allow it to increase production levels.

For the time being, however, IOCs and international engineering and construction contractors will have to look elsewhere for major contract awards because Qatar’s hydrocarbons sector is heading for its quietest period in decades.