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QATAR

9 December 2014

2

World Business Times is a leading global provider of business intelligence and insight

WHILE Qatar is spending a lot of time and effort

diversifying its economy away from its dependence

on hydrocarbons, one rather obvious fact is that for the

present a huge proportion of the nation’s revenues still

come from gas.

As long as Chinese industry continues to grow,

even at reduced levels, the demand for oil and gas will

remain high.At the start of November Chinese premier

Li Keqiang held a symbolic meeting in Beijing with

Sheikh Tamim bin Khalifa Al Thani. But there was

real substance behind the meeting as Qatar and China

made public their intention to deepen their relationship

with a sharp focus on oil and gas cooperation.

This is no short-termquick fix andChina is looking

to build an enduring, strategic relationship involving

a number of facets of energy cooperation with Qatar

as well as in strengthening bilateral cooperation in

oil and gas exploration and development, liquefied

national gas production and integrated cooperation

in the petrochemical industry. Sheikh Tamim, in turn,

focused on the development of Qatar-China relations

and stressed that Qatar intended to strengthen bilateral

ties and cooperation as well as people-to-people

exchanges. It seems certain that China will remain a

long-term customer for Qatari gas.

Energy specialists from around the world have

been attempting for some time to establish what

effect US fracking will have on the oil and gas

economies of the Gulf but it seems fairly certain that

Qatar will remain a major gas exporter irrespective

of developments in US shale. The emirate aims to

trim exports of condensate and instead produce more

naphtha and other higher-value products for sale to

Asia, while the boom in US shale output continues

and oil prices plummet.

Gas is here to stay, especially if the Pearl Gas-

To-Liquids plant is anything to go by. Its scale is

breathtaking. Wael Sawan, MD and chairman of Qatar

Shell Companies says, “From a project perspective,

Pearl GTL is of a scale and of a materiality that for

both Qatar and Shell is huge. It is the largest single

value asset in the Shell portfolio. Definitely the largest

GTL plant in the world by a factor of four times. Given

the production levels of this asset, it makes a lot of

money for both stakeholders but more importantly, it

really is a source of pride for the partnership... It is a

very complex plant. We have a thousand people and

a couple of thousand contractor partners who work

on Pearl GTL on a daily basis. Our ability to make

sure that everyone is safe every single day is a big

challenge and something we are very focused on.”

It is easy to see that Shell is proud of its

achievements in Qatar. “We are incredibly proud…

It is an asset that is made up of technologies that

involve 3,500 patents, all having to be put together

at world-scale proportions. At peak we had 52,000

people building this plant. Thankfully all technologies

worked as planned so over the past two to three years

what we have had is a focus on seeing how can we

continue to achieve the production levels that we have

set for ourselves. More importantly, how do we keep

raising the bar so that we can really achieve what our

long term destination was going to be? On many,

many fronts we are very proud,” says Sawan.

Qatar’s interest in working with global companies

like Shell is driven by a complex series of reasons, but

skills transfer and expertise transfer both lie at the core

of the relationship. Sawan says, “Technology earned

us the right to be partners with Qatar and Pearl GTL.

We developed this technology as proprietary in house

and we showed that it worked and this is what got us

through to be chosen as the partner. From that point

onwards there has been a whole stream of technologies

from how we process gas, take out contaminants from

the gas and so on. Having developed the technologies

that we had, it allowed us to do these tasks a lot

cheaper. It doesn’t just end at building the project. In

terms of LNG, our partnership with Qatar has helped

us achieve a lot of firsts. Of course the scale of the

trains that we talk about, 7.8 million tonnes are the

largest LNG trains in the world. This also goes all

the way through the supply chain into shipping. The

Q-Max and the Q-Flex vessels are the largest of their

kind in the world and allow economies of scale to be

deployed in order to ship large quantities of LNG all

around the world. Technology is the bread and butter

of how we drive our business.”

Safety and regulation have recently become

bywords in the extractive industries and this has not

passed Qatar by. Dr Mohammed bin Saleh Al-Sada,

minister of Energy and Industry and chairman of Qatar

Petroleum has made it clear that the nation is acutely

aware of the health, safety and environmental (HSE)

burden being placed on the oil and gas sector in Qatar.

Opening the Petroleum Engineers Middle East Health,

Safety, Environment and Sustainable Development

conference in Doha recently Al-Sada said, “This

year’s theme captures what the industry needs to do

in the face of evolving global HSE trends and how

to overcome the technical challenges at present. It is

a theme that is brought to the front by the changing

balance of priorities across a wide spectrum of global

industries, foremost of which is oil and gas. Therefore,

the question remains: How can we optimise our

business performance and accommodate technological

advances, yet at the same time manage to reduce the

risks associated with our industry; protect the people,

both our workers and the communities within which

we operate; and preserve the local, regional, and

global environment.”

Oil prices have plunged lately in part because

of US shale oil production and in part because of

weaker global demand and market oversupply but the

reality is that economic growth in China and the rest

of Asia are set to absorb any spike in supply caused

by US shale gas volumes. There is no denying that

Qatar has felt its gas prices being squeezed. Three

years ago, Qatar could sell its liquefied gas to the US

for $5.82 per thousand cubic feet. In 2013 the price

had fallen to $3.40 but there is no sign that Qatar

will cut supply to lift prices. Qatar simply has too

much invested in the industry and this is nowhere

more evident than in the Laffan Refinery’s role in the

diversification process.

At the 18th Annual Condesate and Naphtha Doha

Forum in November , Qatargas CEO Sheikh Khalid

bin Khalifa al-Thani said, “The Laffan Refinery is of

strategic importance as it will contribute to diversifying

Qatar’s energy mix and further strengthens the

capacity to respond to the country’s changing needs

and future challenges.”

It is impossible to go very far in the Qatari business

landscape without running into the Qatar National

Vision 2030 and the Laffan Refinery is no exception.

The refinery is, “yet another step in realising the

Qatar National Vision 2030 through achieving

sustainable development by ensuring the optimisation

of Qatar’s natural resources,” according to the

Qatargas CEO.

Laffan Refinery 1 and Laffan Refinery 2 projects

are set to double their current condensate refining

capacity to 300,000 bpd but with greater attention paid

to environmental concerns. The design of the Laffan

Refinery is said to meet stringent environmental

standards while its refined products undergo treatment

to produce an ultra-low sulphur content. Producing

such refined products from condensate lets Qatar

assume the position of a leading producer of cleaner

fuels and helps to position the emirate as the biggest

condensate processor in the world.

Qatar National Vision 2030 is underpinned by

environmental concerns and this tends to colour the

way that projects are undertaken, particularly in the

oil and gas space. Qatargas, for instance, recently

inaugurated the Jetty Boil-off Gas Recovery Project

in Ras Laffan Industrial City, which is a $1bn

environmental project designed to eliminate flaring

at the LNG terminal. The project is owned by Qatar

Petroleum, ExxonMobil, Total, ConocoPhillips and

Shell, the facilities are operated by Qatargas and

RasGas and form the largest LNG boil-off recovery

project in the world.

The Jetty Boil-off Gas Recovery Project facilities

kicked off in October and projections suggest that

100 million standard cubic feet per day of natural

gas previously wasted during the loading of LNG

containers for shipping will be recovered and used in

the LNG production plants as fuel. Over 30 years, the

project could save up to 1 trillion cubic feet of gas.

Along the way, greenhouse gas emissions are slashed

and help maintain a clean environment.

Barzan going strong

The Barzan natural gas field should begin producing

early next year and contribute about 50,000 bpd of

condensate. Qatar already exports 500,000 bpd of

condensate but will reduce shipments to 350,000

barrels daily as it uses more at home. Additional

condensate fromBarzan will help to offset some of that

drop. Some of the condensate will be processed into

naphtha and lift exports of naphtha by three million

metric tons a year, once the Ras Laffan refinery starts

operating. Qatar presently ships seven million tons of

naphtha annually.

Both the oil and gas industry have come under

increasing scrutiny over recent years in terms of

sustainability. Sustainability developments have

become apparent in the sector driven in large part by

shareholder concerns. “At the Royal Dutch Shell level,

we were one of the first companies to

start talking about sustainability publicly. Over

the past decade what we have been able to do is shift

from a generic concept of sustainability to matching

that sustainability with our core fundamental values

and what the countries themselves need. There are

some basic values that we hold as Shell, now let us

take those basic values and see what Qatar is trying

to do and then match the elements of sustainability in

a way that meets Qatar’s requirements,” says Sawan.

Qatar’s requirements are likely to increase in the

coming years rather than decrease as business grows

and tourism, including sports tourism, becomes a

defining factor in the growing integration of the

economies of the Gulf and those of Europe.

Money might make the world go ‘round but the world wouldn’t get

far without oil and gas. And that is good news for Qatar.

William Maimer reports

An entire ecosystem is required to ensure the efficient workings of a gas-based economy. This involves the downstream side of the

business, such as fertilisers, as well as value-added services like marketing and promotions. Whatever the stripe of the business,

in Qatar it is big business.

Daniel Cliff reports

GAS is big business. Downstream gas industries

are big business. Getting the products to market is

big business too. Naturally enough, for a sector that

plays so dominant a role in the Qatari economy,

the government has a big hand in making sure that

all sectors are profitable, modern and the most

competitive that they can be.

Qatar is currently exploring and evaluating

various potential opportunities to establish value

added projects and industries, diversifying the national

economy and providing high tech jobs. These projects

and industries will make available the needed raw

material feedstock for the petrochemicals conversion

projects that will be developed by the private sector.

Alwaseeta, also known as Qatar Intermediate

Industries Company, is a big part of the gas

infrastructure jigsaw. Ali Hassan Al-Sidiky, vice

chairman and managing director of Alwaseeta says,

“We are really the missing link between the primary

industry, which is handled by Qatar Petroleum and

the Qatari government and the secondary downstream

industry managed by the private sector. We link

the two together. We used to be called Qatar

Holding and rebranded as Alwaseeta, which means

‘intermediate’ in Arabic, to share this message.”

Without doubt the rebranding has helped Alwaseeta

in establishing a distinct identity in intermediate

industries and the greater economy of the region.

Alwaseeta was conceptualised by QP and

established by the Supreme Council of Ministers in

2005 with instructions to identify, invest in, build and

develop a broad-range of intermediate and downstream

industrial projects. The aim is to contribute to the

transformation of Qatar’s business landscape into

manufacturing and industrial clusters that produce a

wide range of products destined for local, regional and

global markets and for the use of the private sector.

“Any product that comes out of petrochemicals

used to be exported, but since 2011 some of these

products have been allocated locally and developed

further into intermediate industries. Muntajat, the

marketing firm, takes some of the products and

markets them. Some of them come to us and we use

them as feedstock to develop further intermediate

products. Other products include metals. Qatalum

is a primary company specialising in aluminium.

We are developing projects to use Qatalaum’s products

to produce downstream derivatives of aluminium

that can then be made into consumer products,” says

Al-Sidiky.

One of the core drivers behind Alwaseeta

is a constant search to see how it can help in the

diversification of the Qatari economy. “We try

to develop intermediate industries that use high

technology and produce high quality but varied

intermediate products,” Al-Sidiky adds. In doing

so the firm aims to create more opportunities in the

private sector among local companies to develop

more business and to enhance their businesses using

Alwaseeta products and benefit end users. The net

result is growth in the local economy allowing firms

to import less and use locally made and locally

sourced products. Since Qatar is rich in resources,

this inevitably means identifying projects that use raw

materials that are readily available in Qatar.

“We are always looking for self-sustaining

business opportunities,” says Al-Sidiky. “The core

areas we look at are both hydrocarbon resources and

non-hydrocarbon. In non-hydrocarbons, Alwaseeta

is targeting metals, particularly aluminium, new

technology and ‘green’ environmentally-friendly

technology.”

In line with Qatar National vision 2030, it is

critical that Alwaseeta ensures that its green footprint

is fully in line with international standards. This

involves a complex system of checks and measure to

ensure that all the major boxes are ticked in terms of

environmentally aware business practices. This covers

sectors like waste management where Alwaseeta

uses a waste-to-energy conversion process to extract

natural gas and then uses waste trucks fuelled by

compressed LNG. “While evaluating technology, we

ensure that waste generation is kept to a minimum,”

says Al-Sidiky. “We also aim to eliminate landfill and

incineration using the latest environmentally friendly

processes.”

As with every fast growing sector in Qatar, the

search for overseas partners who can bring expertise

and technology to bear continues. Al-Sidiky adds,

“We are always looking for foreign partners who can

bring technology to bear and help reduce the cost of

our projects, especially in the downstream sector. This

is tough sometimes with issues around JVs and patents

and IP and so on but we are trying to manage these

through incentives and partnership structures.

Indeed the list of JVs undertaken by Alwaseeta

is impressive: SEEF, Qatar Melamine Company and

Gasal. There is no secret to how Alwaseeta chooses

its partners. “We look for partners, who can bring both

technology and financing to the table,” says Al-Sidiky.

“We are always happy to talk to partners who are

interested in expanding their market in the Middle East

region in association with us. Our evaluation is done

on the basis of the value addition and what it would

create in terms of technology, operational expertise

and niche market. Naturally we also undertake

thorough due diligence before selecting a partner.”

As with all Qatari firms, there is a strong

encouragement that jobs are found for promising

young nationals and this process is known as

Qatarisation. How Alwaseeta ensures that this drive

becomes a natural part of its growth pattern is also no

secret. The firm endeavours to use high tech systems

in order to create best working environment to develop

young talent. This message is spread constantly by the

firm using recruitment drives in local high schools and

colleges while also making sure the firm has a high

profile presence in the many career fairs that take

place throughout the year in Qatar.

Still a lot of

mileage in gas

Chemical

and petrochemical decade

Ali Hassan Al-Sidiky, Vice Chairman and

Managing Director, Qatar Intermediate

Industries Company Ltd (Alwaseeta)

Dr Mohammed bin Saleh Al-Sada, Minister of

Energy and Industry and Chairman of Qatar

Petroleum

Qatar is set to remain a major gas exporter irrespective of developments in US fracking and the boom in US shale output