Saudis Tighten Noose Around Qatar, But There is One Area Where Its Ostracism Campaign is Falling Short: Energy

Saudis Tighten Noose Around Qatar, But There is One Area Where Its Ostracism Campaign is Falling Short: Energy

Qatar’s neighbors are trying to isolate it from the outside world by cutting off transport and diplomatic links. There’s one major area where their ostracism campaign is falling short: energy. Qatar is the world’s fourth-biggest energy supplier and wealthiest country by per capita income. It pumps more oil and gas than Rosneft PJSC or Exxon Mobil Corp. and is the biggest producer and seller of liquefied natural gas.

Saudi Arabia and its allies accuse the sheikhdom of funding terrorism and maintaining overly cordial ties with regional rival Iran. The allegations, which Qatar denies, pit Saudi Arabia, the world’s largest crude exporter and biggest supplier in the Organization of Petroleum Exporting Countries, against the group’s smallest Arab producer.

Now Qatar is doubling down on its main asset, the North Field, announcing plans to boost production at the world’s largest offshore gas deposit. Located in the Persian Gulf, the field straddles Qatar’s maritime border with Iran, which refers to its side of the reservoir as South Pars. Paris-based Total SA, which has stakes in Qatari LNG projects and will develop the nation’s Al Shaheen oil field, signed a contract on Monday to boost output at South Pars.

State-owned Qatar Petroleum will boost its production by 30 percent to 100 million tons a year within seven years from about 77 million tons currently, Chief Executive Officer Saad Sherida Al Kaabi said Tuesday. Qatar has more than tripled output of gas over the last decade even as its oil production slumped. If the country adds all the planned new LNG capacity, it will be the world’s top seller of the fuel in spite of expected increases in the U.S. and Australia.

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Gas, condensate, crude make Qatar the world’s fourth-biggest energy supplier

Qatar Petroleum has partnered with Exxon Mobil, Royal Dutch Shell Plc, Total and ConocoPhillips — as well as with Japanese customers Mitsui & Co. and Marubeni Corp. — to build 14 plants that chill gas into a liquid for shipment to Asia and Europe.

Qatar Petroleum, through its LNG-producing divisions Qatargas and RasGas and other investments in related businesses, holds stakes in companies that extract, process, ship and receive gas. This integrated supply chain helps make Qatari LNG the cheapest in the world to produce, an advantage QP plans to exploit as competitors in Australia and the U.S. try to dethrone it as the top producer by volume.

Qatar supplies 30 percent of the world’s LNG, according to the International Group of Liquefied Natural Gas Importers. It’s the main supplier to India, second-biggest to China, and third-largest to Japan, according to customs and trade data compiled by Bloomberg. Qatar also sells natural gas in the Middle East, including to the U.A.E. and Egypt, two countries targeting it in their regional dispute. Shipments of LNG to Egypt have continued during the crisis, as have supplies of gas via pipeline to the U.A.E. and Oman.

Qatar’s crude production dropped to about 620,000 barrels a day from a peak of 880,000 barrels daily in 2008, according to data compiled by Bloomberg. The sheikhdom is now the fourth-smallest producer in OPEC. However, Qatar’s production of other liquids including condensate, a light oil found in hydrocarbon reservoirs, surpassed its output of crude in 2010. These gains — in addition to LNG, pipeline exports of gas to the United Arab Emirates and Oman, and gas-to-liquids fuels produced in partnership with Shell and Sasol Ltd. — far exceeded the decline in crude output and have generated financial surpluses that make Qatar one of the world’s top global investors.

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Qatar churned out 632,300 barrels a day of refined products including naphtha and jet fuel in 2016, mostly for export, according to OPEC’s annual report. The country exported 503,400 barrels a day of crude last year, mostly to Asia, and all of the 568,100 barrels a day of refined products it sold went to the region, the OPEC data show.

Source Link – Financial Express

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