After holding one of the most high-pressure roles in the region’s energy sector for more than a decade, Abdullah bin Hamad al-Attiyah could be forgiven for taking a rest. “We never stop,” he tells MEED. “We have a lot of projects under construction and big projects coming, and all of them are priorities.”

Along with the energy portfolio, Al-Attiyah is the state’s deputy prime minister.

Prior to meeting with MEED in London in early February, the minister had split his previous week between Opec’s oil production meeting in Vienna, Austria, and the World Economic Forum in Davos, Switzerland.

Despite the rigorous schedule, Al-Attiyah is determined to keep building on the state’s success as a global energy player.

“I have not seen my family over the past few months, and yes this job is very tiring [with] two days here and three days there,” he says. “But Qatar is a business. We have to do it.”

This year may prove to be his most testing yet. While the bulk of Qatar’s energy projects are approaching completion, a huge ramp-up in engineering and construction costs is beginning to affect the feasibility of several of its energy megaprojects.

Project delays

Two of the state’s most well-known contracting partners, Paris-based Technip and Japan’s Chiyoda Corporation, have recently admitted to losing hundreds of millions of dollars on executing projects.

Technip flagged up its project execution difficulties to the stock market on 30 January, saying it would incur fourth-quarter charges of nearly $300m because of delays on its four major key liquefied natural gas (LNG) projects in Qatar.

Chiyoda, which has a 60 per cent stake in the joint venture, has yet to put a cost estimate on its exposure to the project delays.

However, investment bank Goldman Sachs says the Japanese company may shoulder a provision of nearly $450m to cover losses.

While Al-Attiyah insists projects will only incur small delays, he recognises the challenges. “We understand that the cost today is very high and some project [costs] go to twofold and maybe four or more above that,” he says.

While Al-Attiyah is reluctant to speak about specific projects, he agrees that new contracting strategies may need to be considered to combat costs and delays.

To achieve its ambitious LNG targets, Qatar has staggered its project scheduling to encourage successful engineering, procurement and construction (EPC) bidding groups to take on multiple contracts, improving the efficiency of procurement and subcontracting.

But after the recent difficulties contractors have faced, Al-Attiyah suggests a change of direction may be considered.

Changing direction

“Maybe we can create a different strategy,” he says. “Sometimes in the big projects we are not always going to go ‘ABC’ with one company but break it into smaller packages to manage.”

Qatar Petroleum’s (QP) joint venture with the UK/Dutch Shell Group, the 140,000-barrel-a-day (b/d) integrated gas-to-liquids (GTL) development, is seen as a smart contracting model, despite the inevitable surge in the overall price of the facility.

The company decided to award the core element on an engineering, procurement and construction management (EPCM) basis to the Japanese/US joint venture of JGC Corporation and KBR, and break up the remaining onshore works into smaller EPC packages. This enabled the company to better control costs and risks, and ensure greater competition among contractors.

Al-Attiyah, however, prefers to tackle each project’s strategy on an individual basis. “This is a cycle [and] we have to live with it and work closely with the contractors, watching them and seeing how best to balance it [the strategy],” he says.

While none of Qatar’s LNG ventures appear likely to be derailed, there is some uncertainty over the next phase of Qatar’s growth beyond its commitment to supply 77 million tonnes a year (t/y) of LNG to world markets by 2011.

In March 2005, Doha imposed a moratorium on new gas projects in its giant offshore North field, with a series of studies under way that aim to clear up much of the speculation over the reservoir. Despite launching the study almost three years ago, Al-Attiyah says it would be premature to speculate on any findings.

“This study is a complete model,” he says. “You cannot just take some portion of it and say this is a true indication of the reservoir.”

He adds that each well requires extensive testing and data analysis, which should not be rushed. “I am not technical but my reservoir engineers say we need to drill 300-400 wells in the North field,” he says. “That takes time.”

The minister is reticent when asked about a long-standing industry rumour that the field’s reserves total more than 900 trillion cubic feet (tcf). “Maybe there are extra reserves because
it is a huge field,” he says. “900 tcf is the certified proven reserves but maybe after all these studies are done it will be bigger than that. We will have to wait and see.”

While no new gas exploration is planned at present, Al-Attiyah says up to 10 million t/y of LNG production could be made available to the state through a major debottlenecking programme at its existing LNG facilities.

“We have a lot of opportunities within the expansion of the existing trains [and] we can produce millions of tonnes extra with only limited cost,” he says.

“We need to avoid building any more grassroots projects because it is very costly - but now we have a big opportunity to debottleneck the big trains, and this will produce another 8-10 million tonnes of LNG easily.”

Domestic production

Despite widespread demand in the region for additional gas supplies, Qatar will continue to prioritise production for domestic use. “We will give gas first to the domestic market because if your market needs it, why should you export it?” says Al-Attiyah.

He gives the example of the state’s power sector. “Ten years ago, we were not exceeding 1,300MW [of electricity demand] and now we will reach 9,000MW in a few years, and maybe we will exceed more than 12-13,000MW in 2013. So we [will] see how huge demand is in the power sector.”

Al-Attiyah says the state’s diversification into downstream is becoming a bigger priority.With LNG production set to triple over the next six years, a surge in GTL capacity and new upstream gas projects planned - such as the 1.7 billion-cubic-feet-a day (cf/d) Barzan project - associated product output will boom.

The possibility of doubling capacity at the Ras Laffan condensate refinery is being assessed and is due to be followed early in the next decade by the grassroots Al-Shaheen refinery.

The Ras Laffan cracker, planned by the US’ ExxonMobil Corporation, and a planned mixed-feedstock petrochemicals complex in Mesaieed with South Korea’s Honam Petrochemical Corporation are also moving ahead.

Some uncertainty exists over the scope of the joint QP/Exxon cracker, but Al-Attiyah is confident it will proceed.

“There is a committee between QP and Exxon and they are discussing the scale,” he says. “There may be delays by a few months but this is normal in the business.”

Qatar is also looking downstream as part of its efforts to diversify through a series of international joint ventures.

Qatar Petroleum International (QPI), a new standalone, government-backed arm of the national oil company, has a sizeable amount of money to invest in global petroleum projects.

Over the past few years, QP has made a series of major investments overseas, teaming up with ExxonMobil Corporation on the Golden Pass LNG terminal in the US, and with France’s Total on the South Hook terminal in the UK.

QP and ExxonMobil also signed an agreement in 2003 to take a 45 per cent stake in the Edison LNG terminal in Italy.

Al-Attiyah says the next phase for QPI is to build on the oil company’s strong relationship with many of the world’s leading international oil companies.

“We create good skills, good know how, and are already engaged with some good partners,” he says. “We are now discussing similar projects - upstream, downstream, power - with different companies, so we believe that QPI is very strong, even though it is only one year old.”

International activities

He is also quick to refute criticism from some quarters that Qatar has been slow to act on the international stage.

“QP has made big stories inside the country [but] people ask why we aren’t going outside,” he says. “We have had a lot of projects in Qatar - more than $120-130bn in projects. I said to them [critics] let us finish first [our projects] and concentrate our skilled people - and then we can go international.”

As head of one of the world’s leading gas producers, Al-Attiyah has become central to discussions about the formation of a gas Opec at an upcoming summit in Moscow in June.

While positive about the prospect of greater co-ordination between gas exporters, the minister says he is awaiting a report written by experts from the existing Gas Exporting Countries Forum before commenting further.

“It is too early to commit as we are still waiting for the report,” he says.

He is more outspoken on the issue of fluctuating gas prices in different parts of the world, and its lack of parity with oil.

“I believe that gas is being discriminated [against],” he says. “We had the oil price at $90 while the gas price in US and Europe was very low. So it does not encourage more producers to concentrate on gas in future. Of course, they [oil and gas] are almost two brothers - they are from the same family and you cannot discriminate [against] family.”

Ultimately, Al-Attiyah is unlikely to complain too much about pricing. He realises the good fortune of coming from almost nowhere in energy circles to become a major global player in a decade.

“The country has changed a lot in the past 10 years and I am very happy to be part of it,” he says.

“We built our skills, we built our people and we built our experience, and we will keep driving forward.”

Career history

• 1973: Joins Qatar’s Ministry of Finance & Petroleum in public and international relations roles