Decision comes as blow to Maersk Oil
- Qatar Petroleum and Maersk Oil had been negotiating for some time
- Al-Shaheen is an extremely technically challenging field
- Maintaining high production until 2030 will be difficult
Qatar Petroleum (QP) has decided to award the Al-Shaheen operating licence on an open tender basis when it comes up for renewal in 2017, a decision that will come as a blow to Maersk Oil, the current concession holder.
QP and Maersk Oil had been at the negotiating table for some time, trying to come to a deal that would see the Danish company sign on until 2030. The tender now suggests these talks have not been successful. However, Maersk Oil will be invited to rebid alongside other international oil companies.
The future operation and development of the Al-Shaheen oil field is of critical strategic importance, said Saad al-Kaabi, CEO of QP, in a statement. Therefore, the selection of our partner in this endeavour will be based on the partners ability to offer the best technological solutions for the fields development, combined with the best financial return.
Al-Shaheen is located about 80 kilometres offshore and its capacity has been about 300,000 b/d since 2007, up from just 20,000 b/d in the mid-1990s.
We have known we would be challenged on terms and conditions in connection with the 2017 extension and have been awaiting more information on how QP wished to go about such a process, said Jakob Thomasen, CEO of Maersk Oil, in a statement. We look forward to this opportunity to continue our partnership with QP, based on our long-term commitment and detailed technical knowledge.
QP has been keen to take back a higher percentage share of its existing oil assets and, in light of lower oil prices, this may have led to some disagreements. Al-Shaheen is an extremely technically challenging field requiring extensive enhanced oil recovery (EOR) to be viable. It is likely Maersk Oil was unwilling to budge due to the amount of investment that would be required to maintain an output of 300,000 b/d until 2030.
MEED reported in late March that QPs lower-yield oil field projects were under serious threat as low crude prices and the onset of shale oil production in the US made many such assets economically unviable in the long term.
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