Regional LNG: Qatar's gas industry scores big successes

The gas industry, notably the liquefied natural gas (LNG) business, is helping transform the Qatari economy. In the latest moves, attempts have made to enter the British gas market for the first time besides taking steps to consolidate its position in the U.S, Gulf News reported.

Qatar's gas development stems from hard facts. Its natural gas reserves could amount to 812 trillion cubic feet, equivalent to 14.8 per cent of the proven gas reserves in the world. Only Iran and Russia have more gas than Qatar, which own 15.5 per cent and 30.7 per cent of the world share, respectively.

However, Qatar's North Field is the single largest reservoir of non-associated gas in the world.

Majority-state owned Qatar Liquefied Gas Co (QatarGas) and Ras Laffan Qatar Liquefied Gas Co. (RasGas) are the two firms producing and exporting LNG. Ras Laffan Industrial City, north of Doha, is home to QatarGas and RasGas. Export started less than four years ago.

Current capacity stands at around 14.6 5 million tonnes per annum (mtpa) heading to clients in Asia, mainly Japan and South Korea. Output is set to rise to nearly 26 mtpa by 2006 to entertain agreements of 7.5 mtpa and 3.5 mtpa to Indian and Spanish firms, respectively.

But production figures continue increasing on the back of growing interest in Qatari LNG, thanks to innovative marketing efforts on the part of minority shareholders in the two original projects. This has necessitated the setting up of RasGas 11 and, more recently, QatarGas 2 and 3 firms.

Abdullah bin Hamad Al Attiyah, Minister of Energy and Industry, has suggested that output could reach as high as 45 mtpa by 2010. But officials are now talking of capacity reaching around 63 mtpa by 2010, mainly for meeting requirements of the American and British market.

Qatar hopes to export 37.5 mtpa to the U.S., the world's largest gas market.

In July, Houston-based ConocoPhillips signed an initial agreement with Qatar Petroleum for the supply of 7.5 mtpa to the U.S. starting from 2009. Of the $5 billion QatarGas 3 venture, Qatar Petroleum will own 70 per cent while ConocoPhillips will own the balance.

The project involves setting up facilities in Qatar and the U.S., with ConocoPhillips buying and reselling gas in the U.S. Qatar expects to gas sign contracts with other American firms.

Other agreements suggest that Qatar could fulfil its ambition of becoming the leading LNG exporter in the world in a span of seven years. RasGas has secured a 25-year contract with Chinese Petroleum Corp for the supply of LNG to Taiwan.

Also, in the second entry to Spain, Endesa Generacion has signed an agreement with RasGas for the supply of 0.8m t/y for 20 years starting from April, 2005.

As part of efforts to make the maximum utilisation of its gas potential, Qatar intends to set up a helium plant in Ras Laffan, thereby joining a select group of producers. Also, Oryx GTL, a $900 million joint venture between Qatar Petroleum and Sasol of South Africa, will start producing 34,000 barrels per day of environment-friendly synthetic fuels in late 2005.

Moreover, Qatar expects to export gas to other GCC markets in the years to come, pumping as much as 3.5 billion cubic feet per day to the UAE, Kuwait and Bahrain. Yet, Qatar is playing a key role in the 15-member Gas Exporting Countries Forum (GECF), which is expected to emerge as "Gas Opec".

Qatar has invested more than $15 billion on gas projects and is expected to invest a substantial sum in the years ahead. The fact is that the LNG business has been achieving extraordinary success, beyond the wildest imagination of industry watchers.(*)