The Gulf emirate of Qatar (officially the State of Qatar) has the highest per capita hydrocarbon revenues in the world and is the world’s largest exporter of liquefied natural gas (LNG). Qatar’s reliance on oil and natural gas is likely to persist for the foreseeable future. Proven natural gas reserves exceed 25 trillion cubic metres (TCM) – 13 per cent of the world total and, among countries, third largest in the world. Proven oil reserves exceed 25 billion barrels (bbbl), allowing production to continue at current levels for about 56 years.
Despite the dominance of oil and natural gas, Qatar has made significant gains in strengthening non-oil sectors, such as manufacturing, construction and financial services, resulting in rising non-oil GDP in recent years to just over half of the total. It is estimated that roughly 85 per cent of Qatar’s export earnings come from oil and gas.
Qatar is a small country at 11,586 km2, but many of its resources are offshore, including most of its share of the world’s largest known natural gas field, the North Field (see map below). Qatar is a non-constitutional monarchy ruled by the al-Thani family, of which Tamim bin Hamad al-Thani is the emir and Abdullah bin Nasser bin Khalifa al-Thani, a member of the ruling family, is prime minister and interior minister. Saad Sherida al-Kaabi is minister of energy and industry and chief executive officer (CEO) of state oil company Qatar Petroleum.
Border disputes with Bahrain and Saudi Arabia were resolved in 2001, and there were plans to build a causeway between Qatar and Bahrain. However, in 2017, a Saudi-led bloc severed diplomatic ties with Qatar and imposed a sea, land and air blockade. The blockading countries, which included Bahrain, accused Qatar of supporting terrorism and issued a list of demands that had to be met for the blockade to be lifted. Among them was the closure of the al-Jazeera broadcasting company, the scaling down of relations with Iran and the closure of a Turkish base in Qatar. Qatar denied the accusation and rejected the demands, saying that its sovereignty is a red line. In 2014, Turkey and Qatar signed a military contract for broader defence coordination against common enemies. The agreement also indicates that Qatar may set up a military base in Turkey if necessary. A Turkish military base in Qatar was completed in two years, and in 2019 more than 3,000 Turkish soldiers are stationed in Qatar.
The majority of Qatar’s residents are non-citizen expatriates. Although precise figures are difficult to come by, it is generally thought that expatriates make up 88 per cent of the total population of 2.7 million. Like the other Gulf countries, Qatar relies on expatriate labour for much of its hydrocarbon and construction industries, including the infrastructure for the 2022 FIFA World Cup, as well as for basic manual labour.
The first Qatarization scheme was formulated in 1962, with Qatari Labor Law No. 3, which stipulated that Qatari nationals are to be given first priority for filling vacant positions in the workforce. However, in 2000, the broadest Qatarization policy started to apply to decrease the number of expatriates in its labour force and increase opportunities for Qatari nationals in critical positions, particularly in energy sector. The policy was introduced in part because the government started to see the expatriates as a national security risk rather than an economic benefit. As a result, it decided to reform the education system. Under this reform plan, policymakers concentrated on developing the education system while disregarded gender related social structure of the society. General criticisms of the policy mainly relate to the lack of a practical approach and cultural norms that result in gender discrimination for females in certain university departments and professions. Second reason that counted under cultural disregards, Qatari Women are unwilling to work long hours away from their families and work in mixed-gender environments. According to the Program of International Student Assessment, the level of students’ science proficiency is worryingly low. Similarly, many graduates have an insufficient level of English to operate effectively in a working environment. This means they struggle to find or complete training courses that will achieve the national labour force targets. In addition, many students choose social sciences rather than the technical subjects needed in the country’s main industries.
Qatar’s proven crude oil reserves are estimated at 25.2 bbbl by the BP Statistical Review of World Energy (as of June 2018), a figure that puts it ninth among OPEC countries and 13th in the world. Qatar’s crude oil and lease condensate production ranks 17th in the world, with most of the country’s production exported. Unlike some other OPEC countries, Qatar did not raise its official reserve estimates when quotas were re-evaluated in the mid-1980s to gain an advantageous allocation. However, these estimates were raised dramatically in 2000, 2001 and 2003, possibly because the figures include condensates and/or some natural gas liquids, according to U.S. Energy Information Administration.
In 2017, Qatar’s oil production averaged 1,916,000 barrels per day (bpd) according to the BP. Crude oil production in 2017 alone averaged about 1,500,000 bpd (barrels per day), according to the YCharts, though OPEC numbers showed somewhat lower production since OPEC often reports lower numbers than independent analysts in order not to indicate large violations of OPEC quotas.
Qatar’s mainstay onshore field, Dukhan, was first exploited in 1949 and has a production capacity of 335,000 bpd. Oil was discovered offshore in 1960 and began to be commercially extracted in 1964 at the Idd el-Shargi field. The largest offshore field is al-Shaheen, which is an associated field entirely surrounded by the non-associated North Field.
Al-Shaheen is operated by Maersk Oil in a production-sharing agreement with Qatar Petroleum. Production is about 330,000 bpd. Other oil production is from smaller offshore fields, such as Maydan Mahzam and Bul Hanine, which are located in the north-east of Qatar’s territorial waters (see map below). Maersk and Qatar Petroleum are investing in enhanced oil recovery techniques to maintain, and possibly expand, production. Qatar has, at times, also modified production slightly in accordance with OPEC agreements, though it has exceeded its quota in recent years.
Qatar has an extensive pipeline network connecting its oilfields to processing facilities at Halul Island and the export terminal at Umm Said. Crude oil that is not exported is piped to the Messaied Oil Refinery, with a capacity of 137,000 bpd. Part of the refinery’s infrastructure includes a condensate splitter, but because of the large amount of condensates produced from Qatar’s natural gas fields, Qatargas decided to build a condensate refinery at Ras Laffan, which came online in September 2009. This refinery has a processing capacity of 146,000 bpd. However, because of a glut in the refining market that was accentuated by the global economic recession, projects to add a second condensate refinery of equal size at Ras Laffan and a new 250,000 bpd refinery at Messaied (to be called al-Shaheen) have been put on hold. The al-Shaheen refinery was to refine additional volumes of heavy crude oil from a planned capacity expansion at the al-Shaheen field. France’s Total and Qatar Petroleum became the partners of the al-Shaheen field through North Oil Company in June 2016. North Oil Company has been operating he al-Shaheen field.
Qatar’s oil consumption has grown considerably in the last two decades and is very high per capita. According to the International Energy Agency’s Oil Market Report, between 2010 and 2015, In total five years, liquified petroleum gas consumption increased from 512,000 tons to 869,000 tons per year, motor gasoline consumption increased from 1,110,000 tons to 1,734,000 tons, and diesel consumption rose nearly 50 percent to 2,430,000 tons. This reflects not only Qatar’s strong economic growth but increasing usage of liquefied petroleum gas (also known as propane) in petrochemical facilities.
Qatar has both the largest non-associated natural gas field in the world and the greatest LNG export capacity in the world. This natural gas field, the North Field, is mainly offshore and part of it crosses the Qatar-Iran maritime boundary (the Iranian section is known as South Pars). re The total gas reserves of Qatar wasestimated at 24.90 trillion cubic meters (tcm) by BP as at June 2018, are ranked third in the world.
Qatar was the world’s largest LNG producer in both 2017 and 2018, with no production growth, as well as the biggest LNG exporter, with 78.7 million tons exported in 2018 (25 per cent of the global supply). In 2018, the government announced plans to expand LNG production capacity from 77 million tons to 110 million tons a year by 2024. According to Oil and Gas Journal J the expansion will increase production by about 32 million tons per year of LNG, 4,000 tons per day of ethane, 260,000 bpd of condensate, 11,000 tons per day of liquified petroleum gas and about 20 tons per day of pure helium.
To put this in perspective, the small emirate has larger natural gas reserves than the United States and Canada combined. Only Qatar’s huge neighbour across the Gulf, Iran, has larger natural gas reserves in the Middle East. Globally, Russia is the only country with larger reserves than Iran.
The North Field has been developed by two consortia, Qatargas and RasGas, for LNG exports, as well as by a third consortium, al-Khaleej Gas, for the local market. All of these companies have Qatar Petroleum as the majority shareholder, with significant foreign ownership and one international oil company as the operator. Operators include Total, ExxonMobil, Royal Dutch Shell and ConocoPhillips. Japanese trading companies Mitsui and Marubeni also have small shares in some projects. RasGas is a 70/30 joint venture between Qatar Petroleum and ExxonMobil; a similar joint venture between these two companies runs al-Khaleej Gas. Qatar Petroleum is planning to increase the capacity in the southern sector of the North Field. According to Qatar Petroleum CEO al-Kaabi, the project would increase the North Field’s production by 10 per cent, adding about 400,000 bpd of oil equivalent.
The vast majority of Qatar’s production comes from the North Field, although some smaller fields contribute production volumes as well. Qatar is now producing in excess of 419 million cubic metres (MCM) per day or 153 billion cubic metres (BCM) per annum from the North Field. This is a sizeable increase since 2008, when production was about 91 BCM, and more than double the production of 2006. As noted above, a number of natural gas liquids (i.e. propane, butane and ethane) and condensates are produced from the North Field. This includes about 150,000 bpd of natural gas liquids and 90,000 bpd of condensates in 2009, though with the completion of additional phases by RasGas and Qatargas, as well as the condensate refinery at Ras Laffan (see above), the condensate figure is significantly higher now. In 2017, consumption of natural gas in the emirate totalled 47.4 BCM. Qatar uses the gas for electric power, petrochemicals and other industrial uses.
Qatar also has a large gas-to-liquids (GTL) capability, creating mainly ultra-pure diesel from methane. Production of GTLs is not subject to OPEC production quotas, although it competes with crude oil indirectly in the sense that the same products are formed (mostly diesel and kerosene/jet fuel). The emirate has one large GTL plant, Oryx, currently in production. The Pearl plant’s two trains came online in 2011. Oryx, a joint venture between Qatar Petroleum (51 per cent) and Sasol of South Africa (49 per cent), produces about 30,000 bpd of middle distillates. Oryx’s Ras Laffan facility is supplied with 8,495 cubic metres per day of lean methane-rich gas from the North Field and can produce 34,000 bpd of liquids, including 24,000 barrels of GTL diesel, 9,000 barrels of naphtha and 1,000 barrels of liquefied petroleum gas. Oryx has proven that GTLs could be a profitable industrial venture at the oil and gas prices of the past few years, but Oryx was budgeted to break even at fairly low oil prices. There is concern that the much larger start-up costs of Pearl (approximately $20 billion), as well as rising demands from buyers to shorten long-term gas contracts in the last five years, could present a challenge to profitability. These are among the reasons that ExxonMobil cancelled its planned 154,000 bpd Palm GTL joint venture. Pearl is a joint venture between Qatar Petroleum and Shell, and its trains will combine to produce 140,000 bpd.
Meanwhile, Qatar is also aiming to protect its LNG share in the world market. Qatar also wants to exploit its reserves before LNG demand decreases, announcing new LNG trains that are expected to be complete in 2019-2020. Japan, China, South Korea and India remain among Qatar’s top LNG importers, although Qatar’s leadership in LNG supply has been challenged in recent years by newcomers such as Australia and the United States, especially in Asia-Pacific markets. Increasing competition is the main reason for the North Field expansion plans.
With so much gas committed to LNG and GTL, it seems that Qatar will not be exporting additional volumes of piped natural gas to its neighbours in the near future. Unlike Qatar, some other countries in the region, such as Kuwait, Bahrain, the United Arab Emirates (UAE) and Oman, need to import gas. The Dolphin Project connects Qatar to the UAE and Oman via an undersea pipeline. In 2017, Oman and the UAE each imported 20 BCM of gas from Qatar via this pipeline. The pipeline from Ras Laffan to Taweelah in the UAE has a capacity of 90 MCM per day, but there are no plans to increase exports via this route.
Qatar had an electricity generation capacity of approximately 8,800 megawatts (MW) in 2017, according to state reports. The sector is run by the Qatar General Electricity and Water Corporation, a government transmission and distribution monopoly. It replaced a government ministry in 2000 and proceeded to sell off its generation assets to the Qatar Electricity and Water Company (QEWC). The QEWC, a partially privatized company, owns the majority of Qatar’s generation capacity, though there are now independent water and power producers. In addition, the QEWC undertakes generation projects jointly with private investors.
Many of Qatar’s power plants are combined with desalinization facilities, for example the Ras Laffan Power Company (RLPC), a joint venture between the QEWC (80 per cent), Qatar Petroleum (10 per cent) and the GCC’s Gulf Investment Corp (10 percent). The RLPC had a $720 million complex built at Ras Laffan by Enelpower of Italy with a capacity of 1,500 MW and 303 million litres of water per day.
As stated on the company’s website, the QEWC is the second largest company in the field of power generation and water desalination in the Middle East and North Africa. It is the main supplier of electricity and desalinated water in Qatar, with a market share of 62 per cent for electricity and 79 per cent for water. The company generates 5.4 MW of electricity and produces 1,173 million litres of water per day. It has upgraded its output capacity from Ras Abu Fontas power stations (A and B) and the satellite stations of al-Wajbah and al-Sailiyah. It also plays a major role in other utility facilities such as the Qatar Power project, which produces 1,025 MW. The QEWC has a 55 per cent shareholding in Qatar Power and a 45 per cent stake in the Ras Girtas facility, Qatar’s biggest power and water project to date. Ras Girtas has an output capacity of 2,730 MW. Qatar Petroleum provides the power projects with natural gas.
Nearly all of Qatar’s power is gas fired, accounting for a large share of natural gas consumption. Electricity is provided for free to individual Qatari customers who are citizens, up to a certain amount per year. The power sector consumes more than 11 mcm of gas per day, and this will grow along with the new capacity. Electricity demand is also growing, in part because it is free up to a certain amount. The transmission network has expanded greatly to handle the additional power. The recent Phase VIII network expansion involved $3.5 billion in contracts. Qatar’s total electricity consumption was around 43 terawatt hours in 2017r The number of electricity customers has increased as well, from 132,429 in 1998 to 191,476 in 2007 and reaching 350,000 in 2016.
In July 2009, Qatar, Bahrain, Kuwait and Saudi Arabia linked their electricity grids. In Qatar, the production of electricity at the end of 2013 reached 8,755 MW, up from 4,032 MW in 2008. This was expected to reach 10,170 MW by the end of 2017, thanks to a significant expansion in the transmission network. According to official records, Qatar Petroleum and the QEWC established a joint venture company, Siraj Energy, to generate solar power, with Qatar Petroleum holding 40 per cent and the QEWC holding 60 per cent in the company. The company aims to diversify the sources of energy production and increase reliance on alternative sources. Land has been allocated in Kharsaah for the project, which is set to produce 500 to 1,000 MW with photovoltaic solar technology.