QP plan to invest US$30bn over next years

QATAR PETROLEUM plans to invest nearly $20bn in the United States and US$10bn in Europe over the next five years “in different projects in different areas”, HE the Minister of State for Energy Affairs, Saad Sherida al-Kaabi has said.

“In the US, of course with the LNG exports that we will have, we also have upstream position in gas, oil, conventional and non-conventional. We think the US has a huge potential in production, going forward…and for a very long time. Europe is another destination that we are looking for investments across the gas to power developments, with our family partners for international expansion, POWERGLOBE QATAR and NEBRAS POWER. So we are looking at investing there,” al-Kaabi said at a plenary session on ‘New age energy policy: a balancing act’ at the Doha Forum on Sunday.

Al-Kaabi said: “In the US, we have very large investments. We have invested in the Golden Pass LNG Terminal. We are in the final stages, assessing with our partners to take a final investment decision on the project. And that should be coming in the next few weeks. “If that goes ahead…that will be an increase of about 60mn tonnes of LNG exports that we will be part of, in addition to the 110mn LNG exports that we are reaching in five years or so.” Qatar Petroleum is majority owner of the Golden Pass LNG terminal in Texas, with Exxon and Conoco Phillips holding smaller stakes. Al-Kaabi highlighted Qatar’s strategy, under which he said, “we plan to grow our production from 4.8mn barrels of oil equivalent per day to 6.5mn barrels of oil equivalent per day in the next few years. “In my view, it is a conservative strategy; we are working very hard to achieve that. We are already almost at that target, if you will.”

In Europe QP holds investments in United Kingdom, Italy and Greece, including LNG terminals and power plant. Based on our partners advice’s we are looking for storage facilities (NG and LNG), new gas to power developments, and FSRU facilities.Additionally, Qatar Petroleum (QP) and ExxonMobil have sealed an exploration and production sharing deal for oil and gas with Cyprus for an offshore block in the Mediterranean Island, a move that would enhance Qatari hydrocarbon major’s international assets buildup. The signing of the contract for offshore Block 10 in south-west of Cyprus, followed the successful bid, which was recently awarded to the consortium of QP and ExxonMobil.

Recently, Qatar Petroleum (QP) signed an agreement with Eni, the Italian energy giant, to acquire a 35 percent participating interest in three offshore oil fields in Mexico. The agreement covers the Amoca, Mizton, and Tecoalli offshore oilfields, which lie in Area 1 in Mexico’s Campeche Bay. The agreement is subject to customary regulatory approvals by the government of Mexico. Following such approval, both Eni and QP will jointly hold 100 percent interest in the Area 1 production sharing contract. Commenting on this agreement, H E Saad bin Sherida Al Kaabi, Minister of State for Energy Affairs and President & CEO of QP,said: “We are pleased to sign this agreement, with our valued partner, Eni, to participate in the development and production of oil fields in Mexico. This agreement marks another milestone for Qatar Petroleum as it strengthens its international footprint and expands its presence in Mexico.”

Al Kaabi added: “QP is pleased to enhance its fruitful cooperation and partnerships with a major energy player like Eni. We are also excited about participating in this development in Mexico’s Campeche Bay, and with first oil production expected by mid-2019, we look forward to collaborating with Eni to ramp up production to around 90,000 barrels of oil per day by 2021.” The National Hydrocarbon Commission of Mexico approved the phased development plan for Area 1 allowing for early production to start by mid-2019 through a wellhead platform in the Mizton field and a multi-phase pipeline for treatment at an existing Pemex facility. The full field production is expected to be achieved in 2021 through a floating production, storage, and offloading facility with a treatment capacity of 90,000 barrels of oil per day. Two additional platforms will be installed on the Amoca field and the Tecoalli field.

Area 1 is estimated to hold 2.1 billion barrels of oil equivalent, 90 percent of which is oil. This is the second presence for QP in Mexico. At the end of January 2018, it won exploration rights in 5 offshore blocks in the Perdido and Campeche basins as part of a consortium comprising Shell and Eni, respectively. In line with its growth plans, this opportunity represents another step in implementing Qatar Petroleum’s strategy to expand its international footprint, and to pursue Latin America as an important core area for its upstream activities. QP’s international upstream footprint has been expanding recently in Brazil, Mexico,Argentina, Cyprus, Congo, South Africa, Mozambique and Oman. Commenting on the QP’s expansion projects, Al Kaabi said: “These expansions go hand in hand with our previous announcements to develop and increase our natural gas production from 77 million tonnes per year to 110 million tonnes in the coming years; and to raise our production capability from 4.8 million barrels oil equivalent per day to 6.5 million barrels during the next decade.”

H.E. SaadSherida al-Kaabi at a plenary session on ‘New age energy policy: a balancingact’ at the Doha Forum on Sunday. With him are Descalzi, Sentyurin andZhdannikov. Picture: QGN

In response to a question from The Peninsula on the feasibility of developing a gas pipeline infrastructure connecting energy-starved countries in the India-subcontinent, including Pakistan and Bangladesh though Iran to supply natural gas at competitive prices, Al Kaabi said it is difficult, as there is Iran which is closer to these markets and has a large natural gas production,hence Qatar decided to follow the LNG policy as it gives it the flexibility to choose the markets with no fear of it facing obstacles in reaching the target markets. Analysts say that LNG is the cleanest form of fossil fuel, but due to liquefaction gasification and other cost, it becomes less competitive with coal and renewables in terms of power generation in these countries. For instance,Pakistan, where per unit cost of power in gas-fired plants is about 9 cents,while coal and renewables are between 5 and 5.5 cents. In this regard, Al Kaabi said that natural gas has a good reputation when it comes to the environment unlike coal, and countries choose what is appropriate to them, in light of international interest in the preservation of the environment.

On the challenges related to developing new LNG markets, especially in a scenario where oil price continues to hover around between $50 and $60 a barrel for a sustained and prolonged period, Al Kaabi said it is not easy to find new markets for LNG due to the requirements of infrastructure needed by these markets such as stations to receive LNG vessels, then converting it to its gaseous from and pumping it into pipes. For example, India which is a promising market but many of its areas do not have such infrastructure.

In September, Qatar Petroleum announced further increase in the capacity of Qatar’s LNG expansion project, by adding a fourth liquefaction train, to raise the country’s liquefied natural gas capacity to 110mn tonnes per year. The fourth liquefaction train, like the three trains announced earlier as part of a project to develop additional gas from the North Field, will be of nearly 8mn tonnes per year capacity.Asked why resource-rich Qatar was investing in the US,where many say the assets are “incredibly overpriced”, al-Kaabi said: “We are expanding and have achieved an exponential growth in our home- Qatar. In 1991,we started the first gas production at 0.8bn standard cubic feet a day. We are today at almost 23bn standard cubic feet a day. We are reaching around 30bn standard cubic feet a day.

“This is an exponential growth we have achieved. We are really utilizing our resources. We have done it methodically.” Al-Kaabi said: “QP is looking nationally- long term growth and strategy for production, which can be sustainable for generations.Externally, we are working to add on to that capability to basically expand our horizon. We are called a national oil company, but I see ourselves being transformed into an international oil company – and an international player. We want to go for viable projects and long-term projects.

“We are long term planners and think of long term horizon. You have to broaden your spectrum, if you really want to grow in oil and gas business,” the minister emphasized. On Qatar’s decision to pull out of the Opec from early 2019, al-Kaabi said,”A lot of people will politicise it (Qatar’s Opec withdrawal). I assure you this purely was a decision on what’s right for Qatar, long term. It’s a strategy decision.” The minister added that “Our strategy is to remain focused on its core business and activities in Qatar and to enhance Qatar’s international standing as the world’s leading natural gas producer.” He said he did not agree with the term ‘Gas Opec’ (when many refer to Doha-based GECF).“It is a forum of gas exporting countries. “We look at data and analysis. We are not Gas Opec.”

Yury Sentyurin, GECF Secretary-General and Claudio Descalzi, chief executive officer, ENI were also on the panel at a session moderated by Dmitry Zhdannikov, Thomson Reuters,Editor in Charge, Energy, EMEA.

Sources: QP, QGN, Al Jazeera Energy News, QNG, PPTA, GT, Reuters.