Magazine article The Middle East

Qatar Encourages Foreign Investment and Joint Ventures

Magazine article The Middle East

Qatar Encourages Foreign Investment and Joint Ventures

Article excerpt

The signing of an initial interim agreement between the state-owned Qatar General Petroleum Corporation (QGPC) and the Italian firm EniChem for a plant to produce 100,000 metric tonnes of toluene di-isocyanate (TDI) annually follows hot on the heels of an oil, gas and petrochemicals investment conference in the Qatari capital at the end of last year -- although the TDI project itself has been under the microscope for some time.

The signing, after the positive outcome of a pre-feasibility study, means that the proposed US$420 million joint venture could go on stream as early as 2003 if all goes ahead as expected to clinch the deal, in which QGPC would be a 51 per cent shareholder. Opinion at the moment is that 70 per cent of the project would be funded by export credits and loans, the remaining 30 per cent by equity.

Qatar is keen to attract foreign investment which will enable it to both exploit its natural resources and diversify its economy in such a way as to protect it, as far as possible, from market fluctuations. Such considerations inevitably cover the establishment of sustainable reserves, prevention of wastage, and maximising returns on production.

A three-day conference at the Doha Sheraton Hotel and Resort, `Oil, Gas and Petrochemicals in Qatar: Opportunities and Developments', organised by IBC Gulf Conferences of the UAE, attracted around 200 delegates, of whom around 50 per cent were from QGPC. The minister of energy, industry, electricity and water and QGPC chairman, Abdullah Bin Hamad Al Attiyah, had originally been slated to deliver one of the keynote speeches but was in fact on a business trip to Korea and Japan in November when the event took place. However, Yousef Hussain Kamal, chairman of the recently inaugurated Ras Laffan Liquefied Natural Gas Company (RasGas) and the country's minister of finance, economy and trade, presented the keynote ministerial address on `New investment opportunities in the Qatari upstream and downstream sectors'.

The keynote industry address, `The outlook for natural gas and liquefied natural gas (LNG)' was from RP Billings, the executive vice-president LNG & power of Mobil Oil Corporation, USA. Mobil already has a share in Qatar's two LNG ventures, RasGas (which began exports last year, and was officially inaugurated in October) and Qatar Natural Gas Company (Qatargas) -- which started exporting to Japan in 1997. Mobil is also keen to supply natural gas by pipeline to the UAE Offset Group's Dolphin project. Taking advantage of Qatar's huge North Field gas reserves, Dolphin would develop a pipeline from Qatar to the UAE and Oman, possibly extending it to Pakistan, with a view to developing the grid to include two other Gulf Co-operation Council (GCC) countries -- Kuwait and Saudi Arabia. ARCO is another operator in Qatar hoping to supply the Dolphin project, but, at the RasGas inauguration, Yousef Hussain Kamal made it clear that QGPC would decide on an appropriate supplier or suppliers. The Dolphin project itself was examined during the conference, as was the question of gas supply to Pakistan.

Despite a predicted increase in global demand for LNG and a decrease in production costs, LNG is expensive to transport and the number of producers is increasing. Long-term contracts are beneficial to the supplier, but the price is often a bone of contention for the buyer, who also needs to establish costly re-gasification facilities. Qatar has established itself as one of the world's major LNG producers and exporters, and the market is expected to grow significantly as the world turns to `clean energy' and tries to limit the emission of greenhouse gases. However, bearing in mind what QGPC sees as the limitations in the LNG market at present, the export of gas by pipeline is being encouraged. So is the development of the petrochemicals industry, using natural gas as cheap feedstock for the manufacture of value-added products, and the use of gas for power in the state. …

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