Powering the country’s thriving economy, the energy sector has made Qatar one of the richest countries in the world with a gross national income per capita of more than $90,000, according to the World Bank. The country invested heavily in developing its natural gas reserves and building infrastructure to export leading quantities of liquefied natural gas (LNG) in the early 1990s, propelling it to become the largest supplier of LNG globally.

GDP & Population Growth

Qatar holds the world’s third-largest natural gas reserves, behind only Russia and Iran. It also holds significant reserves of oil, though it is one of the smaller oil-producing countries in OPEC. Oil and gas accounted for around 51.5% of Qatar’s economic output in 2013, according to the Qatar Economic Outlook 2013-14, though revenues from the sector finance investments and developments across the country’s economy. The country’s GDP totalled more than $183.4bn in 2012, according to the World Bank, marking a dramatic increase in excess of 36% over the previous year.

The population has also grown rapidly in the past decade, going from 629,000 in 2002 to over 2m in 2013, to data from the Ministry of Development and Statistics Planning (MDSP) show. The majority of this population is comprised of an expatriate workforce.

The MDSP reports expatriates account for 94% of the workforce. This surge in population growth and the associated economic expansion is increasing demand for Qatar’s energy, with domestic consumption tripling between 2000 and 2011, according to the US Energy Information Administration (EIA).

Institutional Arrangements

Qatar Petroleum (QP) manages the entire spectrum of Qatar’s upstream and downstream oil and gas resources. The company was established as a state-owned corporation under Emiri Decree No. 10 in 1974. QP owns and operates three onshore and offshore fields.

These include the Dukhan, Maydan Mahzam and Bul Hanine fields. The company conducts most of its exploration and development projects through exploration and production sharing agreements (EPSAs) and development and production sharing agreements (DPSAs) with global oil and gas companies.

QP owns a number of subsidiaries and has a stake in a variety of joint ventures for the exploration, production and sales of crude oil, natural gas and gas liquids, refined products, synthetic fuels, petrochemicals, fuel additives, fertilisers, LNG, steel and aluminium. The natural gas industry in particular involves greater participation of global energy companies.

Qatargas Operating Company (Qatargas) and RasGas Company (RasGas) are the two biggest Qatari LNG firms that were established in partnership with global oil companies. QP owns a majority share in both firms. The Qatar Gas Transport Company (also known as Nakilat) is a subsidiary of QP and manages transportation of Qatar’s LNG.

Finally, there are two companies that manage sales and commercial aspects of Qatar’s energy products. Qatar International Petroleum Marketing Company (Tasweeq) manages the sales and marketing of Qatar’s petroleum products, while the Qatar Chemical and Petrochemical Marketing and Distribution Company (Muntajat) serves as the face of Qatar’s downstream petrochemical and chemical industries.

Global Oil And Gas Market

Natural gas accounts for 24% of global energy consumption, according to BP’s “Statistical Review of World Energy 2013”. Demand for natural gas has grown by an average of 2.7% annually. However, the report estimates that consumption of natural gas grew below this average in 2012, increasing by only 2.2%. This is despite above average growth in Africa and the Americas. Production also grew by 1.9% during the year, according to the BP “Statistical Review”, with the US recording the largest increase in production volumes.

Qatar’s natural gas output increased by almost 8% in 2012. Saudi Arabia’s output increased by 11% during the same period. BP’s report states that global natural gas trade was weak during the year, with almost no growth in trade. This is primarily because Russia decreased exports by 12% while US imports dropped by almost 19%. Global trade of LNG dropped for the first time, decreasing by almost 1% between 2011 and 2012. Qatar’s exports, however, grew by 4.7%. “Everyone is keeping a close eye on supply in the international gas market,” Gary Sykes, president of ConocoPhillips Qatar, said. “Australia has volumes coming on-line and there is a flurry of activity in East Africa. Additionally, unconventional gas resources in the US have the potential to impact the market depending on the amount that gets approved, how much goes to market, if and where it is exported, and of course at what cost.”

Global oil consumption grew by less than the average, increasing by 1% in 2012. This was likely due to a decrease in consumption amongst OECD countries, which account for just over 50% of global consumption. Global oil production increased by 2% due to record production levels in Qatar, Saudi Arabia and the UAE. Trade in oil grew by 1.3%, which might have been low due to reduced imports of oil into the US.

Offshore Fields

QP directly owns and operates two offshore fields with the remainder operated under production sharing agreements (PSAs). The two self-operated stations are in the Maydan Mahzam and Bul Hanine fields. Both stations produce crude oil, associated gas and condensate. The oil and condensate is piped to Halul Island for storage and export, while the gas is either injected back into the field to improve oil recovery or as feedstock at Mesaieed’s natural gas liquids plants.

QP is currently commissioning front-end engineering design (FEED) studies for the redevelopment of the Bul Hanine field. The project would double production at the field to 90,000 barrels per day (bpd).

QP expects the redevelopment project to support the increased production by 2020.

QP had six exploration projects under EPSAs in 2012. Operators involved in the projects included Wintershall, GDF Suez, China National Offshore Oil Corporation and Shell. There are also seven production fields being developed under PSAs with global energy firms. These include the Al Shaheen field, operated by Maersk Oil; the Al Rayyan and the Idd El Shargi field’s North and South Domes, operated by Occidental Qatar Energy Company; the Al Karkara field, operated by Qatar Petroleum Development Company; and Al Khalij field, operated by Total E&P.

“The Al Khalij oil field is producing 25,000 bpd of crude oil. Given the nature of the reservoir itself, the idea going forward is to extend its plateau. Due to the reservoir, we cannot increase production necessarily, but we are testing new concepts and ideas to extend the value of this asset,” Stéphane Michel, managing director of Total E&P Qatar, told OBG.

Onshore Oil Fields

Qatar’s first commercial production of oil and gas was developed at the Dukhan onshore field. The first well was drilled in 1940 though the development plans were put on hold during the Second World War. The Khatiyah sector was developed after 1947, leading to Qatar’s first oil shipment from Dukhan, which was exported from the Mesaieed port in 1949. Two other sectors at Fahahil and Jaleha were developed between 1954 and 1955, enabling Qatar to increase production.

By the late 1980s, the country invested in building a pressure-maintaining water-injection plant, followed by a gas recycling plant to recover condensate and natural gas liquids in 1998. The gas recycling plant processes and recovers 38,000 bpd of stabilised condensate and 750 bpd of natural gas liquids. In 2003 QP implemented a major project to improve production and increase ultimate recovery from the field.

The Dukhan field now has 330 oil-producing wells, 220 water-injection wells and 57 gas wells, according to BP’s 2012 annual report. The 160-sq-km oil and gas field has four main degassing stations. Crude oil produced at the site is piped to the Mesaieed Port, which has storage and export facilities. QP Refinery, a subsidiary of QP located in Mesaieed, also uses crude oil and condensates from Dukhan as feedstock for its products. Other key clients include the Qatar National Cement Company, the Qatar Petrochemicals Company (QAPCO) and the Qatar Fertiliser Company (QAFCO), the region’s largest fertiliser firm. ExxonMobil is preparing a development plan to expand production at the Dukhan field, but these will not come online until at least 2015.

Al Shaheen

Until recently, the Dukhan onshore oil field was Qatar’s largest oil-producing field. This has recently been taken over by the Al Shaheen oil field, which had for deemed unsuitable for commercial production for years. The field was discovered in the 1970s but thin reservoirs across a very large area meant that traditional vertical wells would not be feasible. In 1992 QP signed an EPSA with Maersk Oil. The company leveraged its experience in developing complex Danish oil fields in the North Sea and applied a range of approaches and technologies, from long horizontal wells, to one of the world’s largest offshore water-flood operations and enhanced oil recovery (EOR) techniques, to tap into the reservoir.

According to Maersk Oil, the field was producing an estimated 100,000 bpd by 2000. This output doubled to 200,000 bpd in 2004. In 2005 Maersk Oil Qatar implemented a development plan with a total investment of more than $6.5bn. The plan required building 15 new platforms, drilling 160 wells and also constructing 230 km of pipelines. By 2007 the oil field surpassed Dukhan with a total output of an estimated 300,000 bpd. In 2008 the company drilled the world’s longest horizontal well, measuring over 40,000 feet. In 2010 Maersk Oil Qatar increased production capacity to more than 500,000 bpd, though the company maintained an output of 300,000 bpd.

By 2012 the field had produced 1.273bn barrels of oil, according to Maersk Oil. Total production for the year included 17m tonnes of oil equivalent of hydrocarbons, which included 155m standard cu feet of associated gas per day. The year also marked the implementation of another significant field development plan, which is expected to help maintain production going forward. The oilfield employs over 1400 people at Maersk Oil Qatar, creating 156 new jobs and employing 180 Qatari nationals in 2012.

Other Offshore Fields

While Dukhan and Al Shaheen are Qatar’s biggest oil fields, there are five other offshore fields that round off the country’s oil production. The Al Rayyan field has been operated by the Occidental Qatar Energy Company since 2007, when the company acquired Andarko’s shares in the project. By 2012 Occidental had implemented its field development strategy of drilling six of seven planned wells. The field development plan also involves measures that are expected to increase the capacity of the facility to handle 220,000 bpd compared to an existing capacity of 180,000 bpd.

Occidental Petroleum of Qatar is operating the North and South Domes of the Idd El Shargi field. A field development plan was approved in 2011 for the North Dome, which included drilling 30 new wells. According to Qatar National Bank, Occidental Petroleum of Qatar is expected to invest as much as $3bn to sustain production of an estimated 100,000 bpd from the Idd El Shargi field by implementing a water-injection system to improve oil recovery. Meanwhile, Total E&P Qatar operates the Al Khalij oil field. According to QP, 61% of the country’s oil is produced at facilities operated under EPSAs and DPSAs, while 39% of oil is produced at fields operated by QP itself.

Total Oil Production

According to the BP’s “Statistical Review of World Energy 2013”, Qatar has 23.9bn barrels of proven oil reserves. The Oil & Gas Journal ranks Qatar’s reserves as the 13th-largest in the world, and OPEC ranks the country as the 10thlargest exporter of crude oil and liquids out of the 12 OPEC countries. According to the “Statistical Review of World Energy 2013, Qatar produced 1.97m barrels of crude oil and natural gas liquids in 2012. The Dukhan and Al Shaheen fields are the country’s main sources of oil, with total production of 270,000 bpd and 300,000 bpd, respectively, according to QP.

Despite growth in total output, Qatar remains one of the smallest producers of crude oil amongst OPEC countries, with only Ecuador and Libya producing less. Although petroleum production has increased recently, output at Dukhan is in decline. However, as the development of the Al Shaheen field demonstrates, the country has significant reserves that can be tapped to sustain output. According to the US EIA, Qatar will aim to increase total production capacity from 950,000 bpd to 1.2m bpd by employing EOR techniques to improve recovery from its existing fields. Production has spiked since 2009, enabling net exports to increase greatly as local demand has grown at a slower rate. According to the US EIA, Qatar consumed 183,000 bpd of petroleum in 2011.

While this level of consumption still leaves the country with a significant surplus for export, the rate at which consumption is increasing is noteworthy. According to the US EIA, consumption has more than tripled since 2000. The transport sector is one of the biggest sources for this increased demand.

Qatar National Bank reports that crude oil production will rise to 800,000 bpd by 2017. QP is expected to invest over $6.6bn between 2010 and 2014 to develop crude oil projects and to improve production. The exploration service agreements that are currently in place will help QP appraise the scope for advancing the sector. The development plan being completed by ExxonMobil for the Dukhan oilfield, for example, will help increase production after 2015. Similarly, the Bul Hanine field is also expected to double production to 90,000 bpd.

Oil Exports

Qatar’s oil exports are managed through two main processing facilities at Halul Island and the Mesaieed export terminal. Halul Island generally manages crude oil supplies from offshore oil fields, with most of the onshore output sent to the Mesaieed terminal. Ras Laffan is the country’s third major export facility but caters mainly to the LNG sector. Asian markets form Qatar’s biggest clients for oil exports, with Japan and South Korea purchasing the largest quantities of Qatar’s oil.

Halul Island is a major oil terminal located around 96 km away from Doha. The island serves as the main storage and export terminal for Qatar Marine Crude oil. The 1.5-sq-km island has 11 crude oil storage tanks with a total capacity of 5m barrels. The facility boasts infrastructure that enables two tankers to be loaded at the same time, with a loading capacity of 100,000 barrels per hour. This gives Halul Island the capacity of shipping 2.5m barrels of oil each day. Sub-sea pipelines connect five of Qatar’s offshore oil fields to the island, including two operated by QP and Total E&P’s Al Khalij field. QP has plans to expand the facilities at Halul Island. The FEED is currently being prepared for additional crude oil storage tanks. There are also four desalination plants with a total capacity of 2400 cu metres of water per day being built, with an expected completion in 2013. Other projects include sub-sea power cables from Ras Laffan, a centralised sewage treatment plant and a centralised industrial area to support production facilities.

Natural Gas Production

Qatar has invested billions of dollars developing its natural gas reserves, and the country has since grown to become the world’s largest LNG exporter. The country has proven natural gas reserves of approximately 890trn cu feet as of January 1, 2013, according to the Oil and Gas Journal, and it holds the third-largest natural gas reserves in the world, accounting for approximately 13% of total global reserves.

The North Field, which is the world’s largest non-associated natural gas field, accounts for most of Qatar’s reserves. The field, discovered in 1971, covers an area of 6000 sq km with total proven reserves of 900trn standard cu feet. Commercial exploration was initiated in 1991, with production serving local demand. Total production in 2012 was reported to be 305bn standard cu feet of gas and 8.4m barrels of condensate. Condensates and natural gas liquids are of growing importance in Qatar. The US EIA estimates that total production of condensates and natural gas liquids was more than 1m bpd, which was higher than Qatar’s crude oil production.


Qatar’s LNG industry took root when Qatargas was established in 1984. The firm has grown to become the largest LNG production company in the world, with an LNG production capacity of 42m tonnes per annum (mtpa), representing almost 55% of Qatar’s total LNG output. Qatargas operates seven LNG trains, four of which are the world’s largest megatrains each with a production capacity of 7.8mtpa. The company has a history of supplying LNG to Asian countries. In 1992 Japan’s Chubu Electric signed Qatargas’s first major sales purchase agreement, with a 25-year deal for 4 mtpa starting in 1997. Chubu Electric added more through a second sales and purchase agreement for another 2 mtpa in 1994.

According to Oxford Energy, sales prices were tied to global oil prices plus between $0.60 and $0.90 per 1000 British thermal units for transportation. Qatargas separated upstream sales of raw gas from downstream sales of LNG. Producing raw gas required investments of more than $1.2bn, while LNG trains would cost an additional $2.8bn.

Qatargas has four main LNG projects known as Qatargas 1, 2, 3 and 4. Qatargas 1 consists of three LNG trains with a total capacity of 10 mtpa. The LNG facility is located onshore, with 20 production wells supplying the plant with 45m cu metres of gas per day. A sub-sea pipeline transports the gas to the LNG terminal. In addition to gas, Qatargas 1 produces 51,000 barrels of condensate per day. QP owns 65% of the project, with ExxonMobil and Total owning 10% each and Japan’s Mitsui and Marubeni each owning 7.5%. Some 11 ships with a capacity of 135,000 cu metres transport LNG from the terminals to clients as far apart as Japan and Spain.

Qatargas 2 was opened in 2009 and, according to Qatargas, was the world’s first fully integrated LNG venture. The project consists of two LNG trains with a total capacity of 15.5 mtpa. The facility produces 0.85 mtpa of liquefied petroleum gas (LPG) and 90,000 barrels of condensate per day. It is served by a total of 14 Q-Flex and Q-Max vessels, with the UK serving as one of the largest markets. Qatargas supplies an estimated 20% of the UK’s natural gas via the South Hook Terminal. The two trains have a different ownership structure. QP owns 70% of Train 4 and 65% of Train 5. ExxonMobil is second-biggest shareholder with 30% in Train 4 and 18.3% of Train 5.

Qatargas 3 started production in 2010 while Qatargas 4 began production in 2011, rounding off the firm’s planned expansion. Qatargas 3 has one train with a capacity of 7.8 mtpa. QP owns 68.5% of the project, with ConocoPhillips holding a 30% stake and Mitsui owning the remainder. QP also owns 70% of Qatargas 4 with Shell controlling the remainder. LNG produced from Qatargas 4 is then transported on eight ships constructed in South Korea.

Qatargas signed a number of long-term purchase agreements in 2012. According to QP, Qatargas signed a long-term LNG sales and purchase agreement with Japan’s Tokyo Electric Power Company for 1m tonnes of LNG per annum starting in 2012. In addition, the company signed a 0.5-mtpa agreement with Japan’s Kansai Electric Power Company. That deal secures sales for a period of 15 years starting from 2013. Other recent deals include a 15-year, 1-mtpa contract with Chubu Electric of Japan, and a 20-year, 2-mtpa deal with PTT Public Company of Thailand.


QP and ExxonMobil established RasGas as a Qatari joint stock company in 2001. However, Ras Laffan LNG Company was established by emiri decree in 1993. QP controls a 70% stake in the company with ExxonMobil holding the remaining shares, and RasGas is the operating company for a number of LNG facilities in Qatar. The firm is on track to becoming the biggest LNG company in the world. It currently operates seven LNG trains with a total capacity of 37 mtpa. Most of its operations facilities are based in Ras Laffan Industrial City. Trains 1 and 2 started production in 1999, with the two biggest mega trains, with a capacity of 6.6 mtpa each, coming online in 2009 and 2010. Ras Laffan LNG Company 2 was established in 2001 and produces from three 4.7-mtpa trains. Ras Laffan LNG Company 3 (RL3) was founded in 2005 and developed trains 6 and 7 in 2009 and 2010, respectively. The two mega-trains have a combined production of approximately 15.6 mtpa.

RasGas has long-term purchase agreements with companies in six countries: South Korea, India, Taiwan, Belgium, Italy and Spain. Ras Gas has three long-term agreements with the Korea Gas Corporation (KOGAS). In 2012 RL3 and KOGAS signed the third agreement increasing long-term sales to 9 mtpa and making KOGAS the largest single off-taker of RasGas LNG. India’s LNG imports from RasGas represent almost 10% of Qatar’s total output. In 1999 Petronet signed a sales and purchase agreement for 5 mtpa of LNG for delivery to India’s first operational LNG terminal at Dahej in Gujarat.

In 2006 the agreement between RasGas and Petronet was increased to 7.5 mtpa. Taiwan’s CPC Corporation import approximately 4.5 mtpa of long-term LNG from RasGas under two sales and purchase agreements, the last of which was signed in 2011.

In 2007 RasGas signed a deal for just over 2 mtpa with Distrigas, followed by 3.4 mtpa with EDF Trading. Meanwhile, in 2003 Italy’s Edison Gas signed a sales and purchase agreement for 4.6 mtpa over 25 years starting in 2009.

QP owns a stake in the offshore regasification terminal that processes the RasGas deliveries in Italy. The terminal processes 10% of Italy’s natural gas needs and has contracted 80% of its capacity to Edison to regasify Qatari LNG. Spain’s Endesa, which signed a sales and purchase agreement for 0.8 mtpa over 20 years in 2003, rounds off RasGas’s key clients.

Al Khaleej Gas Project

In addition to LNG facilities, RasGas manages two gas-production facilities. ExxonMobil operates the Al Khaleej gas project under a DPSA with QP. The plant is located at the Ras Laffan Industrial City and meets about 65% of local demand. The facility supplies a variety of domestic clients, including the Ras Laffan Power Company, which supplies power for the Industrial City, Mesaieed Industrial City, and to the ORYX GTL facility, which uses Al Khaleej’s output as feedstock. The project also produces condensates, LPG and sulphur for export, and ethane for the local petrochemicals industry. and ethane for the local petrochemicals industry.


Qatar’s North Field has been under a moratorium on new natural gas development projects since 2005, and it is not yet clear when it will be lifted. The government has placed these restrictions to assess production data and develop a strategy in order to optimise output from the field. According to Total E&P’s Michel, “The lifting of the moratorium must be assessed on several levels. Technically QP needs sufficient feedback on how the field will perform at peak production levels. The idea of inflation tension when it is restarted coupled with the work for 2022 must all be considered. LNG market trends and future demand must also be considered before starting new projects.” Arnaud Berthet, the general manager of GDF Suez Exploration Qatar, told OBG, “The development of the oil and gas sector in Qatar domestically will mainly rely on the lifting of the moratorium on the North Field and pre-Khuff exploration. Regarding the latter, exploration campaigns of several operators are currently under way but it has yet to be foreseen if this will yield any positive results that could materialise into economic projects.”

Barzan Gas Project

The Barzan gas project was the last development to be approved before the moratorium took effect. The project is a joint venture with ExxonMobil, with QP controlling a 93% stake and ExxonMobil holding the remaining shares. RasGas will operate the plant, which is located in the Ras Laffan Industrial City, while the drilling platforms are located 80 km offshore. Contracts to build the onshore and offshore facilities were awarded to JGC of Japan and Hyundai Heavy Industries of South Korea.

According to QP, the project will be developed in two phases, with Train 1 coming on-line in 2014 and Train 2 in 2015. Barzan is expected to supply an estimated 2bn standard cu feet per day of gas. This will increase RasGas’s total offshore production to about 11bn standard cu feet per day, which is equivalent to almost 2m barrels of oil. This will propel RasGas into becoming Qatar’s largest gas producer. It is expected that much of the output from the facility will be used for the domestic power and water sector. QP reports that construction of the sub-sea pipelines and both the on and offshore facilities is being implemented on schedule.

Dolphin Energy

The Dolphin project was envisioned as a cross-border gas network to supply the GCC region. The project currently transports almost 2bn cu feet of gas per day from Ras Laffan, with the majority being shipped to the UAE and Oman via a sub-sea pipeline. The DPSA between QP and Dolphin Energy was signed in 2001. Dolphin Energy itself is a joint venture between Abu Dhabi’s Mubadala Development Company, which owns a 51% stake in the company, and Total and Occidental Petroleum, which each have a stake of 24.5%. The project delivered its first supplies of gas in 2007.

New Gas Discoveries

Qatar has recently discovered a new natural gas deposit with reserves of an estimated 2.5trn cu feet. QP, Germany’s Wintershall and Mitsui will develop the reservoir, which is in an area called Block 4N. Wintershall had signed an agreement to explore the block in 2008. While the new discovery is small in comparison to the North Field, the field offers new opportunities in the market within the context of the North Field moratorium.

Gas To Liquids

Qatar has become a global leader in the growing gas-to-liquids (GTL) industry (see analysis). GTL creates diesel and gasoline products using natural gas as feedstock. Sasol, an international integrated energy and chemical firm based in South Africa, formed a joint venture with QP to build ORYX GTL in 2002. The project is owned by QP, which has a 51% stake, and Sasol, which owns 49% of the shares. The plant has a production capacity of 32,400 bpd and gets its feedstock from Al Khaleej Gas.

Royal Dutch Shell has also entered the GTL market with Pearl GTL, the world’s largest GTL facility, built for a total of $19bn. The plant has a daily production capacity of 140,000 barrels of GTL products. Output from the plant has already provided a boost to industrial output: Qatar exported an estimated 1.5m tonnes of GTL products in 2013. The plant also produces jet fuel, which is supplied to Qatar Airways through Tasweeq. However, GTL plants are expensive to build and maintain, which makes them risky ventures.


The Oil and Gas Journal reports that Qatar has a refining capacity of 338,700 bpd as of January 2013. Qatar currently has two refineries with a third under development. The Laffan Refinery, Qatar’s first and one of the world’s largest condensate refineries, started production in September 2009. Qatargas operates the refinery. The facility is owned by a consortium led by QP, which owns 51% of the project, and ExxonMobil, Total, Idemitsu, Cosmo, Mitsui and Marubeni. The refinery has a processing capacity of 146,000 barrels per stream day (bpsd). Both Qatargas and RasGas supply the plant with feedstock. The plant has a production capacity of 61,000 bpsd of naphtha, 52,000 bpsd of kerojet, 24,000 bpsd of gasoil and 9000 bpsd of LPG.

The second existing refinery is the QP Refinery, which was established in 1958. The plant was expanded between 1995 and 2001 to increase refining capacity to 137,000 bpsd. The expansion included treating units to produce jet fuel and diesel. The new Laffan II Refinery will essentially double condensate refining capacity by an additional 146,000 bpsd. The plant is expected to open in 2016. QP owns 84% of the project with Total, Idemitsu, Cosmo, Mitsui and Marubeni rounding out the remaining shareholders.

Downstream Industry

In addition to its LNG projects, RasGas also operates plants that process and maximise the use of natural gas liquids during the extraction process. These include two helium production plants shared with QatarGas that have a combined annual production output of approximately 2bn standard cu feet per day. Qatar’s helium exports make Qatar the largest exporter of helium and the second-largest producer; the plants are also expected to meet almost 25% of global demand for the gas.

Helium is extracted during the LNG cooling process.

The helium II plant is the biggest helium-refining facility in the world with an annual capacity of 1.3bn standard cu feet. Qatar’s North Field is estimated to hold almost 26% of known helium reserves, which positions the country favourably.

Petroleum Products

Qatar also has a growing industrial base producing downstream petroleum products (see analysis). The country currently exports 44m tonnes of petroleum products compared to 77m tonnes of LNG, which highlights the importance of the sector. According to Tasweeq, Qatar exported some 167m tonnes of associated petroleum products between 2008 and 2012. These include LPG, naphtha, condensates and refined products. Tasweeq is the largest exporter of petroleum products globally, though it has plans of increasing domestic sales.

Qatar is increasingly investing in developing petrochemicals. Industries Qatar, a subsidiary of QP, is leading the sector, with 18 companies that manage Qatar’s industrial output. QAPCO and QAFAC are the main petrochemical companies in Industries Qatar’s portfolio. QAPCO produces ethylene, which is used to produce low-density polyethylene. QAFAC produces methanol, which is exported to Asia and Europe or used as feedstock for methyl tertiary butyl ether, which is used to produce gasoline. QP and Shell are currently in the process of developing the Al Karaana Petrochemicals Complex. RasGas’s Al Khaleej Gas 2 Project is expected to expand production of associated petroleum products by an estimated 200m tonnes each year, according to Tasweeq. The Barzan Gas project will also add significant capacity.

Power And Water Utilities

Qatar has invested heavily in building capacity for power and water. The state utility invested more than $9.6bn in upgrading the electricity network between 2000 and 2008. Drake and Scull, an engineering firm with expertise in the water and power sector, reports that the government’s pipeline of investments will be worth more than $125bn over the next several years, with $60bn on infrastructure in 2013-14 alone.

The country produces a total of almost 31,000 GWh of electricity each year, the vast majority of which is generated with natural gas. At the same time, total power requirements have increased from 3550 MW in 2007 to 6412 MW in 2013. Similarly, demand for water has increased from 160m imperial gallons per day (MIGD) to 338 MIGD during the same period. Total capacity in 2013 is estimated to be 8761 MW of electricity, implying a current excess capacity of 2348 MW, and 327 MIGD of water.

Investing Abroad

Clearly there are limited opportunities for expansion within Qatar due to the moratorium. Qatar is therefore adopting a strategy of developing downstream production as well as looking to overseas investments. QP International leads global investments. The state also announced the formation of Nebras, a $1bn fund to invest in electricity and water projects overseas. The Qatar Electricity and Water Company will manage the fund. There is currently some overlap between the two investment funds as QP International will remain engaged in investments in power projects that can be linked to QP’s gas value chain.


The country’s investment in developing the LNG sector in the early 1990s has paid off with big dividends. The North Field, for example, has vast untapped resources that should support the energy sector going forward, once the moratorium on further developments is lifted. Strategic investments in building downstream industrial capacity has helped ensure Qatar itself can capture revenues from producing a variety of products, including helium, naphtha, diesel and jet fuel. Global trends have created a level of uncertainty in the market for Qatar’s exported LNG. The development of US shale gas, for example, has led to the US changing from being a net importer to a net exporter of natural gas. Similarly, new producers in Australia and East Africa are likely to target Qatar’s other big markets in Asia. Sykes, of ConocoPhillips Qatar, told OBG, “With additional gas supplies coming onto the world market, we do not yet know what that means for Qatar. However, Qatar is the largest producer of LNG worldwide, with the largest LNG trains and the largest number of vessels. The country is an extremely reliable supplier and everyone is just going to try and play catch up.”

However, Qatar National Bank does not see these trends as a threat. One reason could be that Qatar has engaged in a number of long-term sales purchase agreements that will not expire for at least another decade. Furthermore, Asian markets have soaked up the excess supply caused by a drop in demand from the US. Demand for Qatar’s gas is likely to increase from Japan, India and South Korea.

According to Sykes,”We have no long-term plans to export gas to the US market at this current time. Our long-term contracts are targeting Asia given the price premium in the market. There are cargoes going into China, Japan and some small European shipments from Qatargas 3.”

Qatar is also looking to the possibility of reforming the sector in a bid to strengthen QP and to expand globally. The government has discussed plans to separate QP from the Ministry of Energy and Industry, which is expected to enable the world’s largest LNG exporter to grow, as well as leverage Qatar’s resources more effectively. These development are likely to secure Qatar’s energy industry moving forward.