Qatar set to power further ahead

Mohammed al Sada, the new Qatari energy minister, outlines his vision for the state's oil and gas sector.

Dr Mohammed al Sada, the energy and industry minister of Qatar, says emirate plans to expand the gas-based chemicals sector.

DOHA // Qatar's new energy and industry minister thinks the emirate's oil and gas sector can become an even greater global force.

But a lack of immediate development prospects in its "upstream" oil and gas extraction sector could present a problem.

The government has placed a moratorium on further development of the North Field, the emirate's side of the world's biggest gasfield, which it shares with Iran. The ban, in place since 2005, is not due to be lifted for at least three years.

"We need to study the reservoir," Dr Mohammed al Sada told a Gulf Intelligence energy forum in Doha this week. "The potential in the future, we still don't know.

"It's purely a technical and engineering type of study," the minister added, without providing an updated estimate on how much longer it might run.

But in the meantime, Dr al Sada, who is also the chairman of the state-owned Qatar Petroleum (QP), plans to oversee a string of projects to maximise economic and social returns from Qatar's huge gas reserves, strengthen the emirate's global gas-marketing network and find new hydrocarbon deposits, at home or abroad.

"We need to emphasise the scale, safety and reliability of our LNG facilities," he said.

Qatar Petroleum International, a unit of QP, is already evaluating overseas prospects. "We have co-operation from many international partners. We have been very much open-minded to partnering with anybody and we don't have any geographic preference. We are open to upstream and downstream projects.

"Ahead of us is going to be the challenging era" for world energy, Dr al Sada predicted. "QP is very much geared to this new era."

In what he described as "an extremely successful achievement", Qatar recently completed a huge investment programme that has more than doubled its annual LNG production and export capacity to 77 million tonnes in just over two years. Indonesia, the next biggest LNG exporter in 2009, has about 35 million tonnes per year of capacity.

But it may be several more years until Qatar, which exported 49.4 million tonnes of LNG that year, uses all its new production capacity. Its shipments of the super-chilled fuel may even have peaked in the short to medium term.

"LNG [output] will obviously be lesser and lesser as we more and more divert gas elsewhere," Dr al Sada said. He confirmed the government had far-reaching plans to expand Qatar's gas-based chemicals sector.

"We still haven't been able to fully realise the potential of petrochemicals," he said.

"There are a number of large projects in various stages of implementation, but that is not the full strategy. We will also have small and medium-sized enterprises capitalising on the petrochemicals and metallurgical projects, so I cannot see us relaxing in the next 25 years."

While Qatar would for now focus on developing its "downstream" (refining and chemicals) hydrocarbons sector, the emirate will still need further "upstream" projects to improve the efficiency of extracting oil and gas from maturing reserves, Dr al Sada said.

Over the long term, there would be ample opportunity for Qatar's LNG exports to resume an upward course, he said, as improved access to plentiful, affordable gas supplies worldwide would lead gas to capture a bigger share of an expanding global energy market. In the meantime, Qatar will continue efforts to negotiate long-term LNG supply agreements with new customers, which increasingly could include other Gulf states.

"I am not going to be surprised if LNG is used more and more frequently in the region," Dr al Sada said. The imports would be driven by "staggering" annual increases of 8 to 10 per cent in regional power demand, he predicted.

He warned Gulf neighbours not to wait too long to place their LNG orders. "I am not sure down the road if we will have the flexibility to divert any more cargoes, because more and more the contracts are converting to long term."

Dr al Sada, a 28-year veteran of Qatar's petroleum industry, was appointed minister of energy and industry, and chairman of QP, in January, succeeding Abdullah al Attiyah in both capacities. The long-serving Mr al Attiyah remains as deputy prime minister and was also named head of the Qatari Emir's court.

Qatar's proved gas reserves of 896 trillion cubic feet are the world's third largest, exceeded only by those of Russia and Iran.