Qatar’s new gas deals

Samuel Ciszuk, IHS Global Insight’s Middle East energy analyst reveals the significance of the move: “Qatar has repeatedly extended its moratorium on new gas projects, with the latest news clearly underlining its dominant train of thought that its end-2010 presence in the global gas markets will be sufficient, bearing in mind the mega-field’s longevity as well as other strategic concerns.”

“The news means that the North Field’s time as a large-scale investment destination has passed, with mainly the existing partners being allowed to monetise some additional reserves depending on the survey outcome, severely diminishing IOC growth possibilities in the emirate going forward,” Cizsuk explains.

“The news is also bad for several neighbouring countries that woke up to their own gas shortages of late and were hoping for the construction of further Qatari pipelines in the future,” he adds.

Qatar is already the world’s largest LNG producer and will have a 77 million-t/y capacity by late next year and even with new greenfield projects, 12 million t/y could still be added through debottlenecking, while Qatar is also likely to keep a margin for the possibility of domestic industry-driven demand growth.

Recent quotes from Saad al-Kaabi, director of oil and gas ventures at state-owned Qatar Petroleum (QP)hinted at the direction that the country is taking. “If we go for grassroots projects, we’ll have to set up new operating projects and we’ll have new costs,” al-Kaabi told Bloomberg.

Despite this news, greenfield investment in the country is still going strong. The German oil and gas producer Wintershall used the International Petroleum Technology Conference (IPTC), held in Doha, Qatar, to announce that it is planning to expand its operations in Qatar and is the operator of three offshore gas field licences in the Gulf state.

A director of Wintershall, Martin Bachmann, says that the blocks are located close to the massive North Field. “We are the largest exploration acreage holder in Qatar at this point in time. We won the blocks against very stiff competition and that is because it is one of the best prospects in Qatari waters,” Bachmann said.

The first exploration well in the Khuff formation of Block 4N will be drilled offshore in 2010 with a second following soon after. Block 4N covers 544 square kilometers in water depths of around 70 metres. Bachmann said that Wintershall plans to invest around US$100 million on developing Block 4N alone.

Wintershall is also operator for offshore Block 3, which was awarded in 2007. The block covers an area of 1666 square kilometers. Wintershall also operates the adjacent Block 11.

Wintershall, a subsidiary of the German conglomerate BASF, also announced that it was planning to open an office in Abu Dhabi that would serve the whole region.

There is a clear view that Qatar, despite apparently holding back on developments in the North Field, is still an attractive place for investors. Mohamed Al Sayed, chief executive officer of Al Shaheen Well Services reveals: “Qatar remains a very attractive market because it is not all just about oil. The gas market is far more stable largely because the projects and sales contracts are long-term ventures.”

GE is another firm which looks at Qatar as a key market. “Qatar has been a real success story for us. Its become a benchmark within GE Oil & Gas and when we look at moving into new areas we benchmark that against the Qatar experience we have had,” explains Mohammad Ayoub, regional general manager for GE Oil & Gas.

With ringing endorsements such as these, Qatar is looking at a bright future, with or without a moratorium.