Low prices fail to thwart Qatar's gas plans

Qatar presses ahead with plans to offer gas exploration licences, despite the downturn in global energy prices.

Qatar is pressing ahead with plans to offer gas exploration licences, despite the downturn in global energy prices. Following its award last month of a production sharing agreement to Wintershall, the German oil, gas and chemicals company, the Gulf state will offer three additional gas exploration blocks for open bidding next year. "We expect to sign more exploration agreements during 2009," said Abdullah al Attiyah, the deputy prime minister and energy minister of Qatar.

Industry officials said state-owned Qatar Petroleum had cut a list of 20 international oil firms interested in competing for rights to explore Qatar's newly created Block A offshore gas prospect to about 12 pre-qualified bidders. Bids are due by the end of this month, and a contract will be awarded in March. The block is close to the world's biggest gas deposit - Qatar's giant North Field and its Iranian South Pars extension - and to Qatar's biggest oilfield, Al Shaheen, which is scheduled to produce about 530,000 barrels per day of crude by 2010.

"This is the richest hydrocarbons area in Qatar," said Saad al Kaabi, the director of oil and gas ventures for state-owned Qatar Petroleum. In the 25-year Wintershall contract with Qatar Petroleum, the German company will initially invest US$100 million (Dh367m) in a 36-month exploration programme, including two exploration wells in 2010. The other two blocks will be opened for bidding early next year, with contracts to be awarded by next summer.

High levels of interest are expected in all of Qatar's new exploration blocks because it may be years before the country opens up areas containing its prized North Field to further exploration. In 2005, it placed a moratorium on plans for additional production from the North Field, which contains an estimated 900 trillion cubic feet of reserves, pending a detailed geological and engineering study of the gas reservoir that is the mainstay of the country's economy. The moratorium is expected to remain in place until 2013. Since most North Field production scheduled to come on stream in coming years has already been earmarked for export, Qatar needs to develop resources to fuel its increasing domestic needs for power generation and industry.

But the nation's remaining gas prospects lie thousands of metres below the Gulf's seabed, underneath previously discovered fields that are already producing oil and gas. The depth of the suspected gas deposits poses technical challenges for companies hoping to exploit them. Qatar Petroleum said it was seeking investors with technical expertise and good exploration track records. [e-mail]