Gas Connections

Qatar

Economic News

22 Jul 2010
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The opening of a major world gas summit in Doha this week saw the country with the world's third-largest natural gas reserves step again into the limelight, with Qatar unveiling fresh five-year export targets.



The conference came amidst a flurry of other announcements too, on pipelines and new trading partners, as well as a warning from Qatari Oil Minister Abdullah bin Hamad al-Attiyah that world oil markets were now oversupplied.



Al-Attiyah made his remarks at the 11th International Middle East Gas Summit. Speaking on February 19, he told reporters that this oversupply was evident in the fact that "We see now how the prices are falling... This shows there is no panic on the market and no shortage in supply."



He declined to be drawn on what OPEC should do about this, however.



Clearly though, when it comes to liquefied natural gas (LNG), Qatar sees no such problem of oversupply.



The minister told reporters that Qatar would be exporting 77m tonnes of LNG annually to the global market as of 2011, which would make it the world's largest exporter of the product.



Driving this development, he said, was the rising price of energy, alongside booming global demand. European and US companies have been particularly interested in Qatari gas, yet other countries are also now weighing in. Most recently in the news on this score has been India, which al-Attiyah said Qatar would soon be exporting to.



Indeed, mid-February saw India's secretary of the ministry of petroleum, MS Srinivasan, in talks with Qatar's RasGas over supplying LNG to the 2184MW Dabhol power plant in Maharashtra.



The discussion involved bringing forwards to 2007 delivery to India's Petronet LNG Ltd of some 2.5m tonnes a year of LNG from a scheduled 2009 start date. Petronet already imports some 5m tonnes per year from RasGas for its Dahej terminal.



The deal appears to solve a major problem with the Dabhol plant, which has been closed since 2001. The plan is to restart the 740-MW phase one of the plant by September 2006, yet facilities at the site will only likely be ready to receive LNG by mid-2007. In the meantime, the government has announced plans to use naphtha to fire the power station.



The minister also made mention of another major gas export project, Dolphin, which he said would come on stream by early 2007 and begin delivering gas to the UAE and Oman. He said that Qatar's daily gas supply to these two would reach 56m cu metres by that year.



The latest official figures show Qatar to have proven gas reserves of some 25,780bn cu metres, making the country third in the world after Russia and Iran. At present, Qatar has an annual production capacity of 37.8bn cu metres.



Qatar also plans to branch out more substantially into petrochemicals, with a major deal between Qatar Holding Intermediate Industries Company (Waseeta) and South Korea's Honam Petrochemical Corporation for a $2.5bn plant reaching the memorandum of understanding stage at the beginning of February.



The venture will be 70% Waseeta owned, with the other 30% from Honam, and will produce raw materials for the plastics industry. It will have an annual capacity of 900,000 tonnes of propylene and poly-propylene, plus a styrene and polystyrene plant of 600,000 tonnes capacity, an aromatics plant of 150,000 tonnes capacity, and by-product capacity of 50,000 tonnes.
The idea is to use the plant as a starter for a range of associated industries as well, as al-Attiyah pointed out. He told reporters that the plant's products would be a basis for new intermediate industries and eventually medium and small industries.
However, not everything in the Qatari energy garden has been entirely rosy this month.
The minister also told reporters at the conference that a $2bn gas pipeline project between Qatar and Kuwait agreed back in 2000 would not in all likelihood go ahead now.
Al-Attiyah said that Saudi Arabia's refusal to allow the 950-km pipeline to pass through its territorial waters was blocking the project, which had longed sparked controversy.
"We waited for three years to solve this issue, but it didn't happen," the minister told reporters at the conference. "So we have released the gas reserves for Kuwait to other projects... We want to keep customers supplied with gas, but we don't think we should sit and wait."
Nonetheless, with a range of other gas projects underway, Qatar looks set to continue to reap the considerable benefits of its natural resources - and of world energy demand.

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