QATAR - Oil & Gas Reserves.

Recoverable oil reserves in Qatar have been the subject of varied speculations. Independent sources put the recoverable oil reserves at 4.7 bn barrels and say they could rise by 30-40% in this decade.

Recoverable reserves of natural gas have been officially estimated at over 910 TCF, consisting mainly of North Field non-associated gas. They are the world's third largest gas reserves next to those of Russia and Iran.

Exploration Background: After Shaikh Hamad Bin Khalifa's September 1992 cabinet reshuffle, when he was crown prince, the state-owned Qatar General Petroleum Corp. (QGPC) was given control over the petroleum sector. E&P terms to foreign firms improved and PSAs were offered for new areas for exploration, onshore and offshore, and for existing offshore fields needing EOR systems.

The radical change for the better was necessary because upstream maintenance work and exploration had been reduced considerably in the first half of the 1980s, with only one rig active in 1984-87. Now there are several foreign companies operating in blocks acquired since new offers for PSAs were made in 1993. QGPC now is named Qatar Petroleum (QP).

Occidental Petroleum (Qatar), a unit of Occidental Petroleum (Oxy) of the US, was the first foreign firm to sign a PSA in July 1994 for EOR-based operations on a producing field: the offshore Idd Al Shargi North Dome (ISND), where output had fallen to less than 20,000 b/d. Oxy began operating in the field in January 1995 and quickly raised its production. The field's capacity now exceeds 90,000 b/d and should rise to 127,000 b/d in 2006. Similar PSAs for other QP fields will be expected later on in this decade, when their reservoir pressure will decline and they will need advanced EOR systems. Idd Al Shargi South Dome (ISSD), on which Elf (now part of Total) had done tests with horizontal drilling, was given to Oxy in September 1997. In July 1999 Oxy began a seven-well drilling drive with plans for ISSD to produce 17,000 b/d in 2006.

Block 1, offshore, is about 8,300 sq km south-east of the peninsula which was relinquished by BP in 1989. It was held by Elf from 1990 but was relinquished in July 1994. Since then the tract has been divided into two separate blocks: B1/North-West and B1/South-East. B1/N-W was acquired in April 1996 by Chevron (60%) and MOL of Hungary (40%). Chevron, the operator, was committed to drill two exploration wells. But the US major relinquished the tract in 2001 after having drilled dry wells. B1/S-E was taken on July 15, 1997 by a Japanese group of United Petroleum Development (UPD), Cosmo Oil and Nissho Iwai, under a 25-year PSA extendable for another five years.

UPD operates the nearby Bunduq oil field, which is shared equally by Qatar and Abu Dhabi. B1/S-E has three small oilfields close to Al Bunduq, found by Shell in the 1960s and early 1970s but left undeveloped. UPD, operator of B1/S-E, was required to drill 30-40 wells at the three structures and to tie oil production to its Bunduq facilities. It found 39o API oil in September 1998 and the well was tested at 6,500 b/d for six months. Now it can produce 8,000 b/d.

Block 2 was awarded in March 1998 to Chevron which was to do 2-D and 3-D seismic by end-1998 and exploration drilling in 1999-2001. Chevron's partners in this are Svenska of Sweden and EnCanada. The Canadian company, which joined this venture as operator in a PSA with QP in March 2002, spudded a second exploration well on the block in October. It was then analysing data from the first exploration well. (En-Canada is Chevron 50% partner in Bahrain's offshore Block 5 which was originally acquired by Texaco).

Anadarko of the US in May 2004 got the 3,279 sq km offshore Block 4 in a PSA in which it has held 100%. It then embarked on a five-year exploration phase. Anadarko has other offshore blocks in Qatar, including one already producing oil (see below).

Maersk Oil Qatar of Denmark in mid-1992 signed a 25-year PSA for Block 5. This is an offshore tract, with structures linked to a section of the North Field. Maersk has since concentrated its exploration work on the Kharaib geological zone, where oil was found trapped in tight reservoirs. Using vertical and horizontal drilling, Maersk has found al-Shaheen field, about 1,066.8 metres below the sea bed. This has turned out to be a giant with five reservoirs, requiring 70 wells. Maersk has established that the oil reserves there are far bigger than originally thought. Al-Shaheen went on stream in late 1994 at 10,000 b/d of 29-33[degrees] API oils. Now it has a nominal capacity of 240,000 b/d but can produce up to 260,000 b/d. This should exceed 500,000 b/d by 2010. Maersk also produces a fairly large volume of gas. Maersk has the option of extending its 25-year PSA for another five years.

Total explores Block 6 offshore, which Elf acquired in early 1989. This block now has an oilfield al-Khaleej field, whose capacity of 50,000 b/d is being raised to 80,000 b/d. Drilling began in 1990 and Elf made the al-Khaleej find in June 1991. This is a 2,800 sq km tract east of Block 1 and was previously explored but relinquished by Shell. Total has a 25-year PSA on this, similar to Maersk's, with an option to extend its period for another five years. Total has bought Agip's 45% stake in this.

Block 7, 4,500 sq km offshore, is adjacent to Qatar's eastern land border. Mobil (now ExxonMobil) did technical studies on it but decided not to bid. A Japanese consortium took up this block in 2001 and was committed to carry out further exploration. Drilling began in September 2001.

Block 8 is a 2,813 sq km tract offshore covering an old QGPC area around (but excluding) the oil producing fields of Idd Al Shargi, Bul Hanine and Maydan Mahzam and the Halul island terminal. This block was taken by Pennzoil of Houston under a deal signed in July 1994. It was committed to drill four wells in four years, starting with one wildcat in late 1995, to test the Cretaceous and Jurassic. The block lies 75 km from the shore in water depths ranging from 30 to 36 metres and is near the maritime borders with Iran and the UAE. It is a salt basin similar to that in the Gulf of Mexico, where 3-D seismic data have led to good oil discoveries. (Block 8 is equal to 117 blocks in the Gulf of Mexico's federal planning area). In September 1997 Novus of Australia took a 25% stake in Block 8.

Block 10, 3,200 sq km in shallow waters between Al Khaleej and Al Shaheen oilfields and relinquished by Total after poor findings, was taken up by Talisman of Canada in December 2002. Talisman is spending $30m on reprocessing seismic data, new seismic studies and drilling of three wells during an initial five-year exploration period.

Anadarko operates offshore Blocks 12 and 13 acquired in 2002 from BP. In Block 12, al-Rayyan field went on stream in November 1996. This has a capacity of 35,000 b/d which Anadarko will raise to 70,000 b/d. It has been exploring Block 13 since late 2003. Anadarko holds 92.5% in Blocks 12 and 13; its new 7.5% partner there is Marubeni Corp. of Japan which last week bought the stake from OMV of Austria. Anadarko holds 49% in the 9,000 sq km offshore Block 11, at the southern edge of the North Field near Ras Laffan, having bought BP's stake in 2002. Block 11 is operated by Wintershall of Germany. Marubeni also bought OMV's stake in Block 13. OMV had got the Blocks 12-13 stakes through its 2003 purchase of the E&P international portfolio of Preussag Energie of Germany.

ONGC Videsh (OVL), a wholly-owned unit of India's state-owned Oil & Natural Gas Corp., in early March 2005 got a PSA for the 120 sq km offshore Najwat Najem oil block against competition by more than 12 companies. Bids for Najwat Najem were invited in June 2004. The block is about 100 km north-east of Doha. A Press Trust of India report on March 2, quoting an ONGC official, said the block was estimated to hold 300m barrels of oil. Under the PSA, OVL was do a two-year appraisal work on a field, which it will then develop and connect to the Halul island terminal for processing and export.

The A-Structure, close to Iranian territorial waters and to the North Field, is to be awarded to the best bidder. Al-Karkara is a gas/condensate field tested by BP in 1987. But BP failed to get Doha to revise PSA terms (at the time, QGPC was still under the control of the then emir, Shaikh Khalifa, whose aides on the state company's board were strongly against giving foreign firms terms similar to those in Abu Dhabi, Oman, etc). Elf appraised both al-Karkara and the A-structure.

Statoil of Norway in February 2005 opened an office in Doha to pursue oil and gas E&P opportunities. The office is headed by Arnfinn Jossang.

In late 1996, QGPC had launched a programme to expand Qatar's oil production capacity and tap its gas reserves. This called for the drilling of 177 wells for oil and gas. Many of the wells were to be drilled for gas in the North Field. Qatargas, the first of the LNG ventures, drilled 20 gas wells, with Total being the upstream operator. ExxonMobil drilled 20 wells for RasGas, the second LNG venture. Many more wells were to be drilled into the North Field for various ventures under separate PSAs.

In May 2000 ExxonMobil and QP signed a $1 bn PSA to develop a North Field section and produce 1,800 MCF/d of gas. QP and each of Shell and ConocoPhillips has a PSA to develop other sections of the North Field for integrated gas E&P/LNG ventures. Abu Dhabi government-controlled Dolphin Energy (DEL) has a PSA for a section to produce natural gas and export it to the UAE, Oman and Pakistan (see Part 2 in Gas Market Trends No. 10).