Qatar set to break string of world records

Interview with Qatar’s energy minister Abdullah bin Hamad Al Attiyah.

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By  Nicholas Wilson Published  October 4, 2005

Interview|~|QatarQ&A50914576JOSEPH-BARR.gif|~|Qatar’s energy minister Abdullah bin Hamad Al Attiyah: we break records.|~|By 2012, the small emirate of Qatar will be producing 77.5 million tonnes per annum (mtpa) of liquefied natural gas (LNG). To put it in perspective, the country was producing 17.6 mtpa last year. As if this were not astonishing enough, the country has completely sold the 77 mtpa and is unable to entertain any new buyers.

As the world’s third largest gas holder after Russia and Iran, Qatar is truly paving its way to become an LNG leader. The success of the country is also that the leaders are equipping the country with the necessary infrastructure to effectively utilise the resources.

Oil&Gas Middle East caught up with Qatar’s energy minister Abdullah bin Hamad Al Attiyah, at the Opec conference, where the minister tells OGME why he is not afraid of making quick decisions.

Russia has gas, Iran has gas and yet there is something that only Qatar did right with that gas, can you tell us what that is?

Everybody has gas… even Nigeria, Angola and Algeria have gas. But, yes we have succeeded in marketing our gas in the first try. We are very happy and proud that we were there, in the right time and in the right place.

What were the initial challenges with marketing gas, especially as LNG (liquefied natural gas)?

With LNG, the difficulty is certainly managing costs. It was very expensive to produce the first few million tonnes. So, our solution was to make larger LNG trains. We will be the first country in the world to construct an LNG train with a capacity of eight million tonnes. By doing this, we will be greatly reducing the unit cost and also the cost of managing several small trains, as running one large train is much cheaper than run three or four smaller ones.

The second aspect that drives up costs is shipping, but I think we solved that problem by building ships with larger capacities. We are the first country in the world; I think to have given out contracts to build more than 70 ships. To date, the largest capacity for LNG cargo in a ship is, I think about 155 thousand cubic metres, but we have orders for a 200 thousand cubic metre ship and we may soon build one with a capacity of 260 thousand cubic metres. So, I guess by combining a large train and a large ship, we are truly talking economies of scale.
And of course, now we have the problem with the Asian consumer as being very closed about their supply demands, so now many of them are coming with their demand and sadly we have already locked our supplies with mostly existing customers. But, we in Qatar certainly have our loyalty to Asia and only wish we could supply them.

Could you tell us about the gas-to-liquids (GTL) process, and why Qatar would want to move to that when it is doing quite well with LNG?

GTL is one of the diversifications we are doing with our gas. We cannot put all our gas in the same basket. Also, GTL is going to produce very high quality fuel, which will greatly solve emission related problems. So, GTL I think is definitely going to succeed. As a producer, I think we can further show our ability to diversify, within our core competence, which is gas.
In Qatar, we are also very proud that Oryx GTL will be in production in next June. This plant has a capacity of 34,000 bpd and we have projects with ExxonMobil and Shell as well and we aim to produce 400,000 bpd of GTL by 2020.

What about natural gas liquids production, Qatar has a good potential for that market?

Oh, yes and it does not fall within the Opec quota. We have good potential and that is why we are building a condensate refinery in Ras Laffan with a capacity of 140,000 bpd and later will be building another with 150,000 bpd capacity. The Ras Laffan refinery will be coming on stream by 2008. I think on this note, I can also tell you that the world is facing a huge crunch when it comes to refineries and Qatar is doing its share in building them.

What is the progress on Q-Chem 2?

We are close to the award actually; we will announce the contractor in two weeks. If you recollect a few weeks back we announced the contract for the Ethylene Cracker unit that will supply Q Chem 2 and Qatofin and QPC 2.

So do you see a growth in the petrochemical industry as well, in Qatar?

Yes, we are building one of the biggest, or should I say the biggest Ethylene cracker unit in the world. As you can probably see, we like records, biggest trains, biggest ship and the largest Ethylene cracker unit. But, may be that also tells the world, how transparent and quick we are as decision makers.

What about oil? Is there a decline rate in any of the fields or are you not even worried about it?

No, no, we are very happy to see the oil production go up in Qatar. A few years back, Qatar’s total crude oil production was less than 400,000 bpd, but now we are at about 850,000 bpd, so may be by the end of the decade we can reach 1 million bpd. So, I guess it is all right in terms of oil production.

Indeed, but most of the fields in the world are only declining and do you think you are prepared enough technologically to handle the situation?

We are very careful and don’t allow any oil companies to exceed production. We are not going to let our wells dry. We don’t and will not allow any company, even Qatar Petroleum {national oil company} to reach a level that will damage the wells. We want to oil to last as many years, as possible.

But, will you be willing to invest in some advanced Enhanced Oil Recovery techniques?

We are well versed with steam injection, horizontal drilling and all advanced technology. We are always up to date with technology and invest in the latest.

Finally, what about your plans to supply gas to Kuwait?

We have not yet got permission from our brothers in Saudi Arabia. We are waiting for that. But, we are converting the necessary gas to LNG and we can ship it. Also, if some body things we are going to lose money over this, we are not. We have too many customers and cannot wait for anyone too long.

A few questions on Opec, do you think there is unfair pressure on the Arab producers?

Of course it is unfair. If you see the European markets, they are only asking us to increase production. This production increase will not benefit consumers, as tax is very high in the European countries. Why are they not reducing taxes? Even if we increase production, how are the customers going to benefit … It is a very strange situation that no one is giving much thought to.

If production is satisfactory and the market is really well supplied, then why is that there is suddenly such a hike in prices?

See, it is only refineries that is the culprit. The problem today is not crude oil, but finished products. Even, when Hurricane Katrina is hit, it has created a shortage in products and not crude oil.

We {oil companies} have to focus on investing in downstream activities. Most oil companies are not investing in downstream {refineries, petrochemicals} because of lower margins. Everyone today wants to invest in upstream projects, which is fine, but this lack of investment in downstream has only created a tilted balance, where by the downstream is unable to absorb all of that, which is produced upstream.

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