Qatar: Gas Exports May Soon Give Qatar World's Highest per Capita GDP

By Curtiss, Richard H. | Washington Report on Middle East Affairs, June 3, 1996 | Go to article overview
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Qatar: Gas Exports May Soon Give Qatar World's Highest per Capita GDP

Curtiss, Richard H., Washington Report on Middle East Affairs



On Jan. 1, 1997, the State of Qatar will make its first shipment of liquified natural gas (LNG) to Japan. The gas will come from Qatar's North Field, the largest single deposit of natural gas in the world. That shipment from Qatar's Ras Laffan Liquefied Natural Gas Company (Rasgas) will represent the first return from the North Field on what eventually will be a $10 billion Qatari government investment in gas extraction, liquefaction and shipping.

This gigantic project, funded largely by Qatar's daily petroleum production of 378,000 barrels, will not begin making a profit for Qatar on its enormous investment before the year 2004. Not too long after that, however, Qatar, with a resident population that does not exceed 600,000 people -- of whom only 20 percent are Qatari nationals -- may have the highest per capital gross domestic product in the world.

Petroleum preceded gas as Qatar's major export. Oil was discovered in the Dukhan field, on Qatar's West Coast, in 1939 and by 1940 its wells were producing 4,000 barrels per day. The Dukhan field consists of three oil-bearing strata layered between limestone formations, with a natural gas reservoir underlying all three petroleum layers. The out-break of World War II halted further development until 1947, and exports did not begin until 1949 under the auspices of the Iraq Petroleum Company (IPC), which was owned by a consortium of British, French and U.S. companies.

In 1952 the Shell company of Qatar, a subsidiary of Royal Dutch Shell, made additional offshore discoveries in the vicinity of the island of Halul, some 50 miles east of Doha. Since then, four separate offshore oil fields have been discovered in that region. Qatar's combined offshore and on-shore petroleum reserves were estimated in 1990 at 4.5 billion barrels, providing 32 years of production at 1989 levels.

Since 1949, when Qatar's total population was estimated at a low of 16,000 people, petroleum revenues have attracted a steady flow of expatriate workers from all over the world to the low-lying peninsula jutting into the Arabian/Persian Gulf from the Arabian peninsula. The profits also funded a network of schools and hospitals, scholarships for Qataris to foreign universities, an infrastructure of roads and municipal services, and a lavish program of building ever newer, and larger, residences.

Initial Qatari gas production was of gas associated with its petroleum. In the early 1970s Qatar was flaring about 80 percent of the 16.8 million cubic meters of natural gas produced daily in association with petroleum liftings. By 1979 the proportion of onshore gas flared had dropped to less than 5 percent. This dramatic progress was accompanied by setbacks, however, including a massive explosion in 1977 at the plant producing associated gas from the Dukhan field that killed six people and caused half a billion dollars in damage.

The Qatari government celebrated 20 years of independence on Sept. 3, 1991 with inauguration of Phase One of the North Field development project. By the end of that month it was pumping 23 million cubic meters of gas per day from 16 wells, more than meeting, with its other sources, a domestic demand of 71 million cubic meters per day.

Now the Qatar Liquified Gas Company (Qatargas), owned 65 percent by Qatar General Petroleum Corporation (QGPC), 10 percent each by the U.S.-owned Mobil and the French-owned Total, and 7.5 per cent each by two Japanese investment companies, has divided its production into three "trains," so called because each has its own network of equipment, pipelines, and storage facilities. Output from the first two trains will be purchased by Chubu Electric Power Company in Japan, with seven Japanese power utilities planning to take output from the third train in 1998.

In addition to the Qatargas project, a second smaller one is the Ras Laffan Liquefied Natural Gas Company (Rasgas).

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