Michael Trick, Dean of CMU-Qatar (fourth left, front row) and other distinguished guests during the Dean’s Lecture Series at the Carnegie Mellon University in Qatar, yesterday. Pic: Salim Matramkot/The Peninsula
DOHA: The rise of Qatar as world’s top LNG supplier was not driven by sheer resources. Behind Qatar’s success are visionary leadership with strong conviction, competent and forward looking management. The energy leaders were capable of precise execution and willing to take calculated risk, partnership with highly reputable international companies, and the desire from distant gas import markets to reduce dependence on few exporters, said Dr Ibrahim Ibrahim, Economic Adviser at Amiri Diwan.
Recalling how Qatar was able to reach the leading position in global gas industry, Dr Ibrahim, said in the seventies Gas was not considered by the GCC countries as being a valuable resource since, they were flaring most of it. During this period an oil mentality prevailed in these countries and Gas was looked at as a subservient to oil.
The establishment in 1984 of Qatargas by Emiri Decree to export LNG signaled the end of this uncertainty. Qatar leadership had decided to exploit the field for both purposes: domestic requirements and export, he said.
Qatar’s North Field which is the largest non associated Gas filed in the world was discovered in 1971. Its reserve was estimated in 2009 to be over 900 trillion cubic feet (TCF) representing about 14 percent of the world proven conventional Gas reserves at that time.
Despite its enormous reserve, serious efforts to develop the field did not take place till the mid-eighties. Its actual development started in 1987, and its first production started in 1991. Thus, it took Qatar 20 years from the discovery of this giant field to start its first production.
The establishment of Qatargas was the beginning. It took the company eight years to sign its first Sale and Purchase Agreement (SPA) for the delivery of 4 million tonnes of LNG annually to Japan, and 12 years to deliver its first shipment.
To build a new port, the Father Amir H H Sheikh Hamad bin Khalifa Al Thani, the then Heir Apparent, gave the approval for the creation of a giant Gas hub at Ras Laffan with a world class port even before signing the first SPA with Japan. The cost of the hub at its completion reached $2bn. This is at a time when Qatar was in a tight financial position and had to finance partially the development of the North Field from forward sales of its crude oil, Dr Ibrahim recalled.
To attract a new partner with strong LNG experience to replace British Petroleum which withdrew from the Joint Venture in early 1992. Qatargas worked hard to find such a partner. Luckily Mobil Oil at that time (now ExxonMobil) was looking to strengthen its LNG and Natural Gas reserves holdings, agreed to join Qatargas.
Qatar felt that becoming a global supplier requires a strategy that targets three main objectives: fully integrated project, cost optimisation, and brand name. Qatar developed a unique model of delivering LNG to the market through which it controls production, liquefaction, transportation and in some instances receiving and regasification terminals. Qatar also executed plans to reduce cost in every phase of the LNG delivery chain.
In the Upstream, Qatar increased the size of bore wells to maximise the production from each offshore platforms. The cost of liquefaction in the nineties was extremely high. The capacity of LNG plants was around 2 million tonnes dictated by the high costs of the plant and the size of the Sale and Purchase Agreements prevailing then. Qatar, through aggressive financing and marketing policies, led the industry into expanding the capacities of the LNG plants Within 10 years from 1997 to 2007.
Qatar new plants capacities gradually increased from 2.2 million tonnes to 3.3 million tonnes in 1999, to 4.7 in 2004, and to 7.8 in 2007. The result is a significant decrease in liquefaction cost unmatched by other LNG suppliers.
Qatar’s cost of LNG transportation by the conventional LNG ships especially to the Far East was extremely high. The prevailing size of these ships in the nineties was around 140 thousand Cubic Meter. Again, Qatar led the industry in increasing the size of LNG tankers to reduce the cost of transportation through economies of scale. Both by increasing the size of the LNG tankers and the re-liquefaction plant on board led to a significant reduction in the cost of transportation. Thus, diminishing the negative impact of being far from the market.
In 2017 Qatar exported 75.5 million Tonnes of Liquefied Natural Gas (LNG). This volume represents the largest LNG exports by any country in the world and around 27 percent of the total world LNG exports.
This is despite the tremendous increase of LNG production this year mainly by Australia and the US. Qatar exports LNG to major countries in Asia, Europe, North and South America. Also, it exports LNG or Natural Gas to other Arab countries. In addition, Qatar is the second largest exporter of Natural Gas in the world and the largest producer of GTL with about 65 percent of world GTL capacities.
