OPEC - Qatar To Become World's Biggest LNG Exporter.

Qatar's sustainable oil production capacity is expected to increase from about 850,000 b/d now to 1.06m b/d before 2004 - including its 50% share of Al Bunduq field. Actual output is averaging 700,000 b/d and Qatar's OPEC quota until end-2002 is 562,000 b/d.

In view of its fast-growing capacity, Qatar wants a higher quota from OPEC for next year. With the emirate now housing the main HQ and command and control centre for US forces poised to invade Iraq, Qatar has become so bold in its approach to regional politics that it is rumoured to be considering leaving the Arab League. It has antagonised Saudi Arabia, with Riyadh leaders calling programmes on its popular satellite TV, Al Jazeera, "scandalous". Riyadh was particularly angered in June by a talk show in Al Jazeera. This had Saudi dissidents insinuate that the kingdom's population was turning against the royal family and backing Saddam Hussein because of its continuing links to the US or its dependence on American protection.

It was because of deteriorating relations between Riyadh and Doha that the rumour about Qatar wanting to leave the Arab League was floated around in the past week. It was also rumoured that Qatar's Foreign Minister Shaikh Hamad Bin Jassim Bin Jabor Al Thani, the man said to control Al Jazeera, was "kicked out of Saddam Hussein's office and driven quickly to Baghdad airport" because he proposed arranging asylum abroad for the Iraqi dictator.

One casualty of strained Doha-Riyadh relations is a marine pipeline to supply Kuwait with Qatari gas, with the line proposed to pass overland through Saudi territory and then run under the Gulf waters. The idea was also to supply Bahrain with Qatari gas.

Qatar is to become the world's biggest exporter of LNG before 2010. Its first LNG venture, QatarGas led by ExxonMobil, is expanding its three-train complex to produce 9.2m t/y by 2005 and to have two more trains for TotalFinaElf to bring its capacity to 18.8m t/y by 2008/09. RasGas-1, the second LNG venture led by ExxonMobil, is to add to its two-train complex two RasGas-2 trains with each to have a capacity of 7m t/y - the biggest ever to be built in the LNG business. This will bring Qatar's total LNG production capacity to 39.4m t/y by 2009. But the Qataris predict that actual LNG exports would exceed 42m t/y and, if the US and European gas markets are to be hungrier to justify additional trains, may reach almost 50m t/y.

In their bold approach, the Qataris seem to be racing with the world's biggest LNG exporters. In the process, they seem to be undermining Iran's chances to enter the LNG export business in a big way. The source of all the gas needed is Qatar's 900 TCF North Field, an offshore monster which extends well into Iranian waters where it is called South Pars.

Before the June 1995 coup, in which Shaikh Hamad Bin Khalifa Al Thani ousted his father, Qatar's oil production capacity was 405,000 b/d, including its 15,000 b/d share from Bunduq. The boost in production raised state revenues.

Foreign companies now account for 360,000 b/d of the total oil production capacity, compared to 197,000 b/d in mid-June 1997 and zero in 1994 (with the exception of Al Bunduq). Their actual output is limited to 325,000 b/d including Qatar's share from Al Bunduq. The state-owned Qatar Petroleum (QP) accounts for 490,000 b/d of total capacity and 375,000 b/d of actual output. Of a $27 bn spending programme for Qatar's petroleum started in 1996, about $17.8 bn have been invested by foreign companies. The rest has come from the government, partly from loans raised on international money markets. The gas sector has had the lion's share, with $14.2 bn having gone mainly for LNG related projects. About $7.6 bn have been allocated to boost oil production capacity, with foreign companies providing as much as $7.5 bn under PSAs. The remaining $5.2 bn have been allocated for downstream projects and related infrastructure. Of these, most are new grassroots projects launched in partnership with foreign companies.

Qatar's annual export revenues now are more than three times the 1994 level. The government will have repaid all its debts before 2007. Qatar is a booming emirate, where the government has budgeted a 38% increase in capital spending for fiscal 2002/03. Qatar is one of the busiest drilling centres in the world. Up to 15 rigs have worked at one time in the oil and gas fields during the past six years. The programme since early 1996 has called for 177 new wells to be drilled for oil and gas development ventures. As world crude oil prices have more than doubled since their low of $9/b in early 1999, thanks to OPEC's price defence move in March of that year, upstream activities in Qatar have picked up.

The prospects for finding new oil have improved, thanks to the geology in Qatar's offshore areas and to foreign companies that have applied the most advanced technology in exploration (see 2001 survey of Qatar in Vol. 57, Nos. 9-12).