Oil and Gas

Oil & Gas
The cornerstone of Qatar's economy is the exploitation of its hydrocarbon resources. While considerable efforts are being made to diversify in order to lessen the dependence of the country on this natural resource, there is absolutely no doubt that the vast majority of Gross Domestic Product is generated by oil and gas and its associated industrial activities.

Since the mid 1980's, there has been a major breakthrough in the economic situation, with the discovery of the world's largest known non-associated offshore gas field in Qatari territory; placing the country third in terms of world natural gas reserves. Considerable resources have been invested in the development of facilities to exploit, process and export this invaluable resource. Additionally, the Government of Qatar has taken various measures to boost the production of existing oil and onshore gas reserves to substantially increase their output.
By entering into a series of Production Sharing Agreements with foreign oil and gas companies, Qatar has been successful in attracting foreign investment into its hydrocarbon industries, paving the way for new growth and increased economic activity. Furthermore, with plans to liberalise business laws and attract private sector investment in a variety of economic activities, the country will consolidate and strengthen its economic base by diversification in a number of areas.
Oil export revenues had grown steadily over the last few years until 1998, reaching QR 8.9 billion (US$ 2.44 billion) in 1995 and QR 12.4 billion (US$ 3.4 billion) in 1996. The estimates for 1997 were set at US$ 3.6 billion. Given that enhanced production methods in the oil sector are already in place figures were expected to rise substantially in the coming years.
Production rates had already grown significantly since 1994, and were targeted to reach 700/000 barrels per day (bpd) by the Year 2000. However, revenue projections are wholly dependent on prevalent world oil prices and the tumble in the price of oil in late 1998, added to the imposition of OPEC quotas on production in Qatar have meant that projections will have to be substantially revised.
Qatar Petroleum(QP),established in 1974, is wholly owned by the State and is responsible for all phases of the oil and gas industry in Qatar and abroad.
OIL
Qatar's oil is produced from both onshore and offshore fields. ONSHORE The largest reserves of crude oil are to be found onshore, at the Dukhan field. 49% of Qatar's crude oil currently comes from this source, which is operated solely by QP. Production began here in 1949 and the present processing facilities - separation of crude oil, gas and water - can handle up to 280,000 b/d of oil, 310 MBPD of gross liquid and 260 million standard cubic feet (MMSCFD) per day of gas. Dukhan reserves are estimated at about 2.2 billion barrels.
Dukhan crude, along with separated dry gas and raw condensate/NGLs is pumped via pipeline to Messai'eed. The crude oil is exported from there, while the gas is further processed to produce stabilised condensate and NGLs (for example propane, butane etc.).
Dukhan also produces non-associated gas from its Khuff reservoir, which is used as both feedstock and fuel. QP is making every effort to maximise production at Dukhan, both through new discoveries of oil and gas, and through enhanced recovery techniques of existing supplies. Investment in new processing plants will augment both associated and non-associated gas production, which, in turn will assist in oil recovery procedures. Dukhan crude oil has an API of 41 degrees. *OFFSHORE* Oil was first produced offshore in 1964. Most of Qatar's offshore oil (which, prior to quota impositions achieved production levels of around 291,000 b/d) is located to the East of the Peninsula, although Western waters are in the process of being explored. The area is divided into various fields, some of which are wholly operated by QP, while others are operated by a consortium of QP and foreign partners, via Production Sharing Agreements.
The main fields are: Maydan Mazham operated by QP Bul Hanine operated by QP Idd Al Sharqi operated by Occidental Petroleum Al-Shaheen operated by Maersk Oil Al-Rayyan operated by a consortium headed by Arco /Wintershall Al-Khaleej operated by Elf Petroleum/Agip
Production sharing agreements have also been signed with Penzoil and more recently with Chevron/MOL for exploration and development of further blocks within territorial waters. All the offshore fields have the capacity to increase their production substantially, due to improved technology and drilling methods and should contribute significantly to the oil production goal of 700,000 bpd by the year 2000, provided that current restrictions are no longer in force. Oil from the offshore fields is mostly piped to Halul island for storage and export. The oil exported is of high quality, with a blend API of about 34 degrees and a sulphur content of 1.54 percent.
NATURAL GAS
Onshore natural gas production dates back to 1963, when it was used as fuel for power generation. This production expanded with the establishment of three Natural Gas Liquids plants, which deal with both on and offshore associated gas. NGL-1,2 & 3 in Messai'eed produce methane-rich gas, ethane-rich gas, propane, butane and condensate. THE NORTH GAS FIELD In 1971, an exploration team discovered, lying just offshore to the North East of the peninsular landmass of Qatar, what is considered to be the largest single gas reservoir in the world. Experts have estimated that the recoverable reserves are in the range of 380 trillion cubic feet (TCF) and total gas in place exceeds 500 TCF. The development, utilisation and export of these massive reserves has become a primary national goal and the cornerstone of much of Qatar's projected economic revenue. Initially, the gas was exploited wholly by QP for local consumption, and facilities have been in place for extraction and processing since 1991. However, with a view to significantly increasing production and concentrating on export markets, QP entered into partnerships with overseas companies, forming two Qatari joint stock companies - Qatargas, formed in 1984 and RasGas formed in 1993.
Qatargas operates an offshore area of around 100 sq. kilometres and produces 1200 MMSCFD. The upstream facilities supply the downstream liquefaction plant and are run by a consortium via a Development and Production Sharing Agreement. A three-train, 6 mtpa LNG plant at the new industrial city of Ras Laffan processes the gas and condensates produced by the North Field. Additonally, Qatargas operates 10 LNG carriers, with a capacity of 135,00 cubic meters each, to export LNG from Ras Laffan.
Qatargas shareholders currently comprise QP (65%), Total S.A. (10%), Mobil Qatar Gas Inc. (10%), Mitsui and Company Ltd (7.5%) and Marubeni Corporation (7.5%). Qatgargas export capacity is 6 million tons per annum (mtpa). In 1992, Qatargas concluded a Sales and Purchase Agreement (SPA) to supply 4 mtpa of LNG to the Chubu Electric Power Company of Japan for 25 years, beginning in 1997.
In 1995, Qatargas signed another SPA to export a further 2mtpa of LNG to other Japanese companies and in May 1997 increased sales further by signing their first European contract with Enagas SA of Spain, bringing their total guaranteed sales to well over 6 mtpa.
To date, the offshore production complex is in place, as is a two-train/4 mtpa plant at Ras Laffan. The third/2 mtpa train is expected to be completed in 1998. The first shipment of LNG to Japan left Ras Laffan port in December 1996.
RasGas is 63% owned by QP, 25% by Mobil Corporation, 4% by the Itochu Corporation, 3% by the Nissho Iwai Corporation, while Korean interests hold the remaining 5%.
The initial project production capacity for RasGas was 5 mtpa, using two 2.5 mtpa trains, although the company has the right to produce and sell 10 mtpa, using four trains. Once again, RasGas comprises offshore production facilities and onshore processing/export facilities, located next to those of Qatargas in Ras Laffan. The design of RasGas' plant allows for full flexibility of expansion, to suit market demands. Currently, RasGas has signed a SPAs with the Korea Gas Corporation to supply 4.8 mtpa of LNG for 25 years, beginning from 1999. Plans are underway to market LNG extensively in other countries, increasing sales to the above noted projected total.
RAS LAFAN & MESSAIED IND. CITIES
Oil and gas processing requires specialised, expensive and large-scale plant, in addition to suitable export port facilities. To cater for these needs effectively and efficiently, the Government of Qatar has utilised the existing industrial city of Messaieed, located on the coast approximately 50km South of Doha, and has authorised and promoted the construction of an entirely new urban and industrial development, including an extensive port area, at Ras Laffan, in the North East of the country, close to the North Field. The construction is now completed and the port is fully operational.
OTHER OIL & GAS RELATED INDUSTRIES
The oil and gas industry gives rise to several related industrial processes. Accordingly, there are various companies in Qatar that undertake these processes. NATIONAL OIL DISTRIBUTION COMPANY (NODCO) The National Oil Distribution Company (NODCO) was established in 1968 and is wholly owned by QP. This company operates an oil refinery in Messaieed, and distributes its products both locally and as exports. NODCO is addtionally in the process of constructing a condensate refinery. The company produces butagas, super gasoline, lead-free premium gasoline, kerosene and fuel oil. QATAR FERTILIZERS COMPANY (QAFCO) 1969 saw the establishment of the Qatar Fertilizers Company (QAFCO), which was the first major industrial project to be developed in Messaieed
It is owned by QP (75%) and by Norsk Hydro of Norway (25%). Using the natural gas produced from on and offshore fields as feedstock, QAFCO manufactures ammonia and urea in three different plants. India is the major market for QAFCO ammonia, while China buys most of the urea. Profits have risen steadily for this successful company over the past few years. Establishment of the third plant, inaugurated in March 1997, turned QAFCO into the largest producer of fertilisers in the Middle East. Latest plans, announced in August 1997, include the development of a complex to produce melamine and a fourth fertiliser complex.
QATAR PETROCHEMICAL COMPANY (QAPCO) Qapco (Qatar Petrochemical Company), founded in 1974, produces ethylene, low-density polyethelene, sulphur and other petrochemical products from the ethane-rich gas produced at the NGL-1 plant.
QATAR FUEL ADDITIVES COMPANY (QAFAC) The Qatar Fuel Additives Company was established in 1990. Shareholders include QP, the Chinese Petroleum Company - CPC, Lee Chang Yung Chemical Industry Corporation and International Octane Ltd. The company will produce methanol and MTBE (an octane baster) in new plants in Messaieed. Production is scheduled to commence in late 1999. The Government is additionally committed to promote another Methanol/MTBE project viz. The Qatar Clean Energy Company (QACENCO) and is currently discussing joint venture prospects with various international companies. QATAR VINYL COMPANY (QVC) The joint venture agreement establishing this new company was signed in January, 1997 between QP, QAPCO, Norsk Hydro and Elf Atochem. The company intends to construct a new $500 million petrochemical plant to utilise ethylene produced by QAPCO for the production of ethylene dichloride, vinyl chloride monomer and caustic soda. The plant should be operational by the year 2000. NATURAL GAS TO LIQUID FUELS Most recently, a Memorandum of Understanding was signed between QP, Sasol of South Africa and Phillips Petroleum Company of the USA for the construction of a Gas to Liquids Conversion complex, aiming to produce 20,000 bpd of high quality distillate fuel and naphtha. Construction is expected to be completed in 2002, and the envisaged stock holding will be QP 51%, Sasol 34% and Phillips 15%. Feedstock will come from the North Field Gas reserves. NEW PETROCHEMICAL COMPLEX In May 1997, QP also signed a joint venture agreement with the Philips Petroleum Company to promote a petrochemical complex to produce 500,000 tons/year of Ethylene, 250,000 tons/year of Low Density Polyethylene and 250,000 tons/year of Linear Low Density Polyethylene. Construction should begin in 1999 and the total project value is likely to exceed US$ 700 million. QP will hold a 51% interest in the project, while Phillips Petroleum will hold the remaining 49%.