Lying in the Shadow of Saudi Aramco is an Energy Giant Bigger than Exxon

Overshadowed by its neighbour Saudi Aramco, Qatar Petroleum is the hidden giant of the global energy industry. Yet the state-run company is allowed to pump more oil and gas than Rosneft PJSC or Exobb Mobil Corp due to the country’s colossal natural gas resources.

The company needs to change tack after almost two decades of breakneck growth. As the government bars new drilling in the offshore North Field, home to the gas that made Qatar the world’s leading supplier of liquefied natural gas and as domestic crude output declines, QP plans to expand abroad.

Overseas expansion would not be a problem for QP. Almost all the country’s domestic LNG terminals have been paid for, said Qatar’s energy minister, Mohammed Al Sada, this week. The commodity will be in short supply by 2021, despite a near-term glut, he said.

Qatar started drilling wells in 1939 and exported its first oil 10 years later and the world’s biggest reservoir of non-associated gas is the offshore North Field, discovered by Royal Dutch Shell Plc in 1971, together with the connected South Pars deposit in Iran. But because it showed no crude, the find was a disappointment at the time.

Qatar Petroleum started building 14 plants that chill gas into a liquid for shipment to Asia and Europe after almost 20 years in partnership with Exxon Mobil, Shell, Total SA and ConocoPhillips — as well as with Japanese customers Mitsui & Co. and Marubeni Corp. According to the International Group of Liquefied Natural Gas Importers, Qatar shipped 78 million tons in 2015, or 32 percent of global supply that year and Qatar was the biggest exporter of liquefied natural gas by 2006.

Qatar has become the world’s fourth-biggest energy supplier and wealthiest country by per capita income by more than doubling gas and oil production since 2006.  Qatar Petroleum the company makes and sells more LNG than any other and has overtaken Rosneft and Exxon in total output. In terms of energy production only Saudi Arabian Oil Co., Gazprom PJSC and Naiotnal Iranian Oil Co. are ahead of QP.

One molecule trapped in the North Field is used by NASA even though Qatar doesn’t have a space program. The Qatar Petroleum is the world’s biggest exporter of Helium gas. Two plants with capacity of 2 billion cubic feet per year are operated as joint venture between QP and Exxon and that company would be merged with Qatargas this year.

QP’s crude output has been weighed down by aging oil fields and a dearth of large discoveries. Down from a peak of 880,000 in June 2008, Qatar pumped 615,000 barrels a day of crude in January. By 2o15, Qatar’s production of condensate and other natural gas liquids risen to almost double the amount of crude it was pumping after it had surpassed Qatar’s oil production in 2010.

Nebras Power QSC, the international investment division of a local power company, has a minority stake owned by Qatar Petroleum. Nebras isn’t primarily focused on using Qatar-produced fuel to generate electricity but backs wind, solar and potentially also coal projects. But a strategy of keeping a price floor beneath QP’s main exports and of building gas-fired power plants to help soak up the current glut of LNG is pointed out by its November agreement with Japan LNG buyer Jera Co.

(Adapted from Bloomberg)


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