Sweet & Sour: Qatar: Abundance of riches and powerful friends

The Qataris are calling it the golden era as the tiny gas-rich country reaps the benefit of its new-found position as America's new best friend in the Gulf.

Even before its emergence as the key U.S. ally in the wake of the September 11 estrangement between Washington and Riyadh, Qatar had embarked on an economic and political course that was bound to bring in huge rewards.

Sitting on what are potentially the world's biggest gas reserves, officially put at 900 trillion cubic feet, and as key Opec oil exporter, Qatar has set itself the goal of becoming a major energy hub to serve the region and beyond.

Its Minister of Energy, Abdullah bin Hamad Al Attiyah, has not rested on his laurels. His willingness to invest in innovative technology to convert natural gas into environmentally friendly liquid fuels or gas-to-liquids (GTLs) technology, could make Qatar "the GTL capital of the world."

Investments

Qatar is negotiating five such GTL deals with multinationals, four of them U.S. oil majors, at a cost of $4-$5 billion each. U.S. investments in the Gulf state have leaped to $30 billion in the past 10 years from $300 million previously with the U.S. holding three quarters of the estimated $40 billion in foreign investments in Qatar, much of it in energy projects.

Qatar is using its gas wealth wisely with the North Field providing the engine for growth of a country that already boasts per capital income that at just over $20,000 is among the highest in the world.

The North Field, the biggest reservoir of natural gas, is being exploited to build petrochemicals, steel and power plants as part of plans to develop a value added industry. GTL technology will allow Qatar to maximise profit by selling more valuable refined pro-ducts rather than crude oil.

Integrated network

In concluding an agreement with the UAE Offsets Group to pipe gas from North Field to the UAE, the so-called Dolphin project, Qatar hopes to become the gas font for an integrated network stretching to Kuwait, Bahrain, Oman and even possibly to Pakistan.

Some of these projects hinge on Saudi Arabian approval for a bit of pipeline transiting its territory, currently being held up because of a political row between Doha and Riyadh.

Qatar is selling liquefied natural gas to Asia, the U.S. and Europe while adopting a flexible approach to such sales which have allowed for medium-term contracts that are more attractive to buyers reluctant to be locked into long-term contracts and fixed prices. Plans are under way to double existing capacity.

All these projects, if implemented, will require a total investment of $60 billion over the next decade but Qatar is confident of achieving its targets, given that its economy is now underwritten by the huge U.S. military presence.


- The author is the Middle East editor of energy information and pricing service Platts and the views expressed are her own