Shell back in Qatar in shift toward gas

Royal Dutch Shell is back in Qatar for the long haul as the company shifts its operational focus more towards gas.

DOHA// A little more than a decade after quitting the Gulf state, Royal Dutch Shell is back in Qatar for the long haul.

The emirate that shares the world's largest gas deposit with Iran is a "new heartland" for Shell as the company shifts its operational focus ever more towards gas, said Peter Voser, the chief executive of Europe's biggest petroleum group.

"Qatar is a very important country to Shell," he said yesterday.

"We have a very proud history in general of developing relationships with national oil companies. We are very pleased to see how fast Qatar Petroleum is building up technical and financial capabilities."

This week, Shell and the Qatar state petroleum company produced the first diesel fuel from their US$19 billion (Dh69.78bn) Pearl gas-to-liquids joint venture. It ranks as Qatar's largest industrial project and the biggest commercial facility of its type in the world.

Last year, they inaugurated a new liquefied natural gas (LNG) production facility that has helped establish the emirate as the world's leading exporter of the fuel.

"This is not all we are doing in Qatar. Two months ago we signed a memorandum of understanding with Qatar Petroleum to explore development of a major petrochemicals project," Mr Voser said. "We're also developing new markets for LNG including China and Dubai."

The two companies were planning a joint programme to explore for more gas offshore Qatar and had taken their partnership to an international level with operations in Singapore, he added.

In general, Shell is increasing its already strong focus on gas, with integrated gasfield and LNG developments taking centre stage. The start of gas-to-liquids operations in Qatar and this month's launch of the world's first floating LNG production facility off the coast of western Australia were important steps towards establishing Shell's technical dominance in the global gas business.

"Shell will produce more gas than oil by 2012," Mr Voser predicted.

Next year, gas would account for 52 per cent of the company's combined oil and gas output, with the proportion set to rise in subsequent years.

"It reflects our assumption that gas demand will grow 50 per cent faster than oil demand," Mr Voser added. "Gas is the preferred fuel for generating electricity. A combination of gas, solar and wind [power] should deliver increasing electricity for the world in decades to come."

The gathering European backlash against nuclear power following Japan's Fukushima disaster would mean gas, together with renewable energy, would play an even more important role in the global energy mix than previously anticipated, he said.

In Russia, the world's biggest gas producer, Shell is in talks with Gazprom to expand LNG production at Sakhalin Island.

Mr Voser said he had also held discussions with his counterpart at Rosneft, and Igor Sechin, the Russian deputy prime minister, about a potential collaboration between the two companies, but added it was too early to say where those talks were leading.