A single entity ”QATARGAS”: Why QP merges QG and RG?

Qatar will merge state-owned liquefied natural gas producers Qatargas and RasGas Co Ltd, the chief executive of Qatar Petroleum announced on Sunday.

Saad Sherida Al Kaabi, President and CEO of Qatar Petroleum during a press conference for a major information announcement which took place at Qatar Petroleum Headquarter today. (Photo credits; The Peninsula)
Saad Sherida Al Kaabi, President and CEO of Qatar Petroleum during a press conference for a major information announcement which took place at Qatar Petroleum Headquarter today. (Photo credits; The Peninsula)

Qatar Petroleum (QP) announced a plan to integrate the activities of RasGas and Qatargas operating companies under a single entity, named Qatargas, which will operate all of the ventures currently being operated by both entities. The tie-up of Qatargas and RasGas, Qatar’s number one and two LNG producers respectively, has been talked about for a number of years stretching back before the oil price reduction. At a news conference, President and CEO of Qatar Petroleum Saad Sherida Al Kaabi said that behind the announcement was an element of wanting to cut costs.

“Of course as an outcome of this cost reduction will be realised, it will make us more competitive in the market,” he said, adding that the move would save “hundreds of millions of dollars”, without giving a timeframe for the savings. “It’s one business that will do the same thing. Putting it all (in) one place gives you a much bigger advantage in marketing.”

The transition, which will result in a single company called Qatargas, will take around 12 months to complete and will begin before the end of this year. Once the new structure is in place, some areas of the business could see job cuts, although the operational side of the plants will not be affected, Al Kaabi said. Al Kaabi made the announcement today in a press conference held at QP headquarters in the presence of representatives of the main international shareholders in both companies including ExxonMobil, Total, ConocoPhillips, and Shell, and  the CEOs of Qatargas and RasGas. Al Kaabi said “the integration aims to create a truly unique global energy operator in terms of size, service and reliability”. He added that “we will merge the distinctive resources and capabilities of Qatargas and RasGas to create even higher value for our stakeholders, and enhance our competitive position”.

 “The collective resources, talents, and capabilities of two global leaders will be joined to create an even more effective and efficient organization to uphold the best interest of the State of Qatar, our customers, and our shareholders,” he added. He also affirmed that all Qatari nationals in both companies will be integrated into the new Qatargas organization, which constitutes a major cornerstone in our utmost commitment to building world-class Qatari talent. A Doha-based energy analyst said the move had benefits. “Arguably the reasons for having two firms – to deal with western and eastern markets and also to encourage some competition during the rollout phase of LNG facilities – are no longer relevant,” he said.

Qatargas is the largest LNG-producing company in the world, with an annual output capacity of 42 million tonnes a year, according to its website. While QP owns a majority stake, global energy firms including Total, Mitsui & Co and ConocoPhillips also possess small stakeholdings. RasGas has a production capacity of about 37 million tonnes a year, according to its website. It is a 70/30 percent joint venture between QP and Exxon Mobil.

Source: QGN, The Peninsula, Gulf Times, Gulf Agencies.