As breakthrough talks in Geneva in late November saw the West and gas giant Iran find common ground on the Islamic Republic’s nuclear development programme, its neighbour across the Arabian Gulf, Qatar found succour in the news – despite an initial dip in oil prices.
"The State of Qatar calls for making the Middle East a nuclear weapon-free zone," a Qatar Foreign Ministry official said shortly after the deal. The source said that the deal was an "important step toward safeguarding peace and stability in the region."
The small Gulf state breathed a collective sigh of relief along with its fellow GCC neighbours, Bahrain, Kuwait and the UAE although public comment from Saudi Arabia was conspicuous by its absence.
Spurred by increasing domestic energy needs on the back of its World Cup 2022 winning bid, the gas-rich emirate is investing heavily in mega energy projects such as the US$10.3 billion Barzan Gas Project which, when completed, will supply 1.4 billion standard cubic feet of sales gas per day to the Qatari market.
Qatar’s population is set to swell due to the sheer amount of foreign manpower needed to build its ambitious infrastructure projects – energy and otherwise. This will no doubt impact the country’s electricity demand which is set to increase by 10 per cent annually over the next five years. All of the electrical power capacity generated in Qatar is gas-fired, making the need to exploit the country’s vast as-yet-untouched gas fields a necessity.
The country has recently announced a decision to pre-qualify bidders for the tender of its next independent water and power project (IWPP), which is expected to deliver its first electricity output in late 2016. Power generation capacity from the project is expected to be 2,400MW along with a desalination capacity of 30 million gallon a day.
“Now the focus is two-fold, one is obviously with the development of the basic infrastructure for Qatar, so that is going to be the focus for the next five to 10 years,” according to the managing director of Doha based Oryx Engineering Solutions, Abdulla Mannai.
“At the same time when you do such a big expansion that they did in the oil and gas field, you also have to have time to optimise that expansion, so now it’s at a much slower pace but it is ongoing and once [the country] has digested all this growth, then the next stage [of growth] will start...so it’s somewhat cyclical.”
Mannai expects that in the next two years the country will look at further expansion and cites two major petrochemical plants that are in the pipeline.
New gas field
Sitting on nearly 900 trillion cubic feet of non-associated gas - the world’s single largest deposit, it can perhaps take little effort to find gas in Qatar, most of which is in its prolific offshore North Field shared with Iran.
With gas making up nearly 70 per cent of Qatar’s export revenue, it is perhaps no wonder that the country would like to hold onto this ‘gift that keeps giving’ for as long as possible.
A moratorium on further development of the North Field was instituted in 2005 and is expected to last till at least 2015, its primary goal is to allow Qatar to study the long-term health of the reservoir.
The Barzan Gas Project - a 90-10 joint venture between state oil company Qatar Petroleum (QP) and ExxonMobil – the last North Field gas project approved just before the moratorium came into play, is expected to come online sometime next year.
Nevertheless, it has not stopped Qatar from finding new deposits outside of the North Field. In March this year, a new “important” gas field was discovered about 30-40 km northwest of the giant North Field.
Block 4 North, which covers 544 sq km, is the first gas discovery Qatar has made in 42 years and is estimated to contain about 2.5 trillion cubic feet of recoverable gas. It is the product of a four-year study by partners Wintershall and QP.
“We have been progressing exploration activities in Block 4 North with our partners, for the past few years as part of our strong exploration drive, which is in line with HH the Emir Sheikh Hamad bin Khalifa al-Thani’s vision to continue to prudently explore and develop our natural resources and increase Qatar’s hydrocarbon reserves. We are very pleased that we have found a new gas discovery in Qatar,” announced at the time by Dr Mohamed bin Saleh al-Sada, Qatar’s Energy Minister.
Block 4 North is in addition to six other blocks that are under active study, the minister also said.
“I would expect that there will be further developments, there will be more exploration and production but it’s also got to be looked at in light of the global economics - what’s the need or demand? The more the production the lower the price so you have to manage the price and market, Mannai explains.
In sharp contrast to its GCC neighbours who are scrambling to meet rising domestic energy needs mostly through gas, Qatar still holds an unenviable position of having more gas than it knows what to do with.
With gas being a key energy source for the world economy – and in some ways overtaking oil’s established position – a country like Qatar can only stand to gain from its natural wealth for the foreseeable future.
Picture: Qatar's major Barzan Gas Project under construction is said to be more than 80 per cent complete at the time of publishing.
This feature first appeared in the December 2013 edition of Pipeline Magazine.