GCC Insights: Qatar presses ahead with oil sector plans

Qatar continues to increase oil production capacity at a time when development in the gas sector, notably liquefied natural gas (LNG) industry, is making headlines.

To this effect, ConocoPhillips recently revealed plans to develop a $5 billion project with Qatar Petroleum for the supply of 7.5 million tonnes a year of LNG to the U.S. by 2009.

To be sure, oil production capacity has increased substantially in a span of one decade. Qatar's oil output stood at 290,000 barrels per day (bpd) in the first half of 1980s rising to 690,000 bpd in 2000. Current production capacity surpasses 850,000 bpd.

Output is poised to reach to break the one million bpd line by end of 2004 on the back of a series of production sharing agreements signed with international oil companies. But actual production is less than capacity, as per Opec quota for Qatar. In fact, Qatar's energy minister, Abdullah bin Hamad Al Attiyah, heads Opec.

Qatar's oil is generated from inshore and offshore sources, with the growth coming primarily from offshore fields developed by international oil companies. Qatar Petroleum operates the sole onshore Dukhan plus two two offshore fields of Bul Hanine and Maydan Mahzam. The combined production of the three fields amounts to around 475,000 bpd.

Over the last few years, state-controlled Qatar Petroleum had signed a series of production sharing agreements with American and European oil companies. These international oil firms undertook to devote know how, technology and funds to invest in exploring and developing fields with promising reserves of commercial quantity.

The balance in oil capacity is generated from five offshore fields operated and developed by International oil companies. Occidental Petroleum of the U.S. operates Idd Al Shargi North Dome plus South Dome.

Last November, Occidental agreed to make capital investments for mounting 144 million barrels of oil reserves, as part of phase 2 development of the North Dome, which is estimated to cost $560 million. In turn, this would raise production to 127,000 bpd by 2006.

Also, under a revised agreement, Occidental has the contract to make full field development of Idd Al Shargi south dome, at a cost of $212 million.

Al Shaheen Maersk Oil of Denmark operates Al Shaheen, which has capacity of 112,000 barrels. TotalFinaElf of France operates Al Khaleej with a capacity of 60,000 barrels.

Anadarko Petroleum Corporation of the U.S. controls 92.5 per cent of the Al Rayyan field.

Recently, new production facilities raised sustainable daily output capacity from 23,000 to 45,000 barrels at Al Rayyan, several months ahead of schedule.

Still, exploration works remain steady. National Petroleum Construction Company of Abu Dhabi has a contract to construct pipelines amongst other works related to development of Bul Hanine field. Also, Talisman Energy of Canada has a concession to develop offshore block 10 close to Al Shaheen field.

Meanwhile, the authorities contemplate awarding concession areas that became available following resolution of border disputes with Bahrain. Qatar's proven oil reserves were put at 4.5 billion barrels only five years ago. However, newly released statistics put recoverable oil reserves at around 15.2 billion.

Higher Qatari reserves accounted for most of added reserves of Arab states of 21.5 billion reserves in the past five years. The major credit behind this achievement primarily goes to exploration works carried out by international oil firms in Qatar's offshore oilfields.

International oil companies undertook to devote the know-how, technology and funds to invest in exploring and developing fields promising reserves of commercial quantity. The future looks promising. Qatar plans to invest more than $3.5 billion in further developing the oil sector, as part of Qatar Petroleum's five-year plan.

The writer is assistant professor, College of Business Administration, University of Bahrain