- Tuesday, June 4, 2019

Qatar’s modest history of fishing and pearling was forever changed in the mid-20th century with the discovery of oil reserves. First discovered in 1939 but delayed by World War II, oil made it possible for Qatar to begin expanding and modernizing in the 1950s. Qatar joined OPEC in 1961. Oil paved the way to a variety of opportunities and in 1971 Qatar became an independent state.

It was that same year, 1971, when exploration engineers discovered natural gas off Qatar’s northeast coast. At the time no one realized just how important this find would prove to be. Over the next 14 years multiple appraisal wells were drilled, fifteen in all. In 1985 it was established that Qatar’s North Field was the largest non-associated natural gas field in the world. It was determined to have recoverable reserves of more than 900 million standard cubic feet. To put that in perspective, the North Field made up more than 10% of the entire world’s known reserves. The only countries with larger proven gas reserves were Russia and Iran.

The North Field lies off the northeast shore of the Qatar peninsula and covers a massive underground area, equivalent to about half the land area of the State of Qatar.

QatarGas, established in 1984, is the entity that develops, produces, and markets hydrocarbons produced from the North Field. It is processed to produce LNG, GTL, NGL and other gas-related industries, in addition to pipeline gas for export.

Today, QatarGas is unparalleled in the industry in terms of reliability, size and service. It operates 14 Liquified Natural Gas (LNG) gas trains with a total annual production capacity of 77 million tons. That provides about one third of the global market of LNG and makes QatarGas the largest LNG producer in the world.

In an effort to ensure their long-term global gas position, Qatar has plans to boost its liquefied natural gas production to as much as 100 million tons annually. It exports gas at a daily rate of about 11 billion cu ft. The country’s proven gas reserves remain at an estimated 880 trillion cu ft. meaning Qatar will continue to be a world leader in gas sales for one hundred years or more.

Always the Good Neighbor

Showing amazing restraint in the face of the Gulf Crisis blockade initiated against Qatar in June of 2017 by Saudi Arabia, the UAE, Bahrain and Egypt, the world’s gas leader has opted not to cut off the gas it supplies to its angry neighbors. In a discussion with The Washington Times a high ranking Qatari official who preferred not to be named told of the intense debate in the immediate aftermath of the onset of the economic and diplomatic blockade.

As the official describes it, he and other members of government leadership spent nearly one full day laying out for the Emir of Qatar, His Highness Sheikh Tamim bin Hamad Al Thani, all the reasons to cut off the natural gas being supplied by pipeline. If Saudia Arabia and Bahrain wouldn’t allow Qatar to use land, air or sea routes for commerce, why would Qatar continue to provide this valuable energy source to them? Their argument was passionate and detailed. The impact of cutting the natural gas supply would be immediate and harsh. Cutting power would send a strong and unmistakable message.

After listening intently, the Emir announced Qatar would not be cutting off the natural gas pipeline supplies to their disgruntled Arab brethren. Incredulous, the officials who had been trying to persuade him demanded to know why. The Emir smiled and asked his team of experts who they thought would be impacted by a power shortage in neighboring countries? Would the lights go out at the palaces? Of course not. Royalty would find an alternative to ensure their own daily comfort. It would be the masses, the people that would suffer. His Highness saw no reason to inflict punishment on the people of neighboring countries even if the leadership of those same countries sought to harm his people. Nothing good could come from such an act.

Today, not only does the supply of natural gas from Qatar continue to flow, but when a problem arose with the pipeline, Qatar found alternative delivery means to ensure an uninterrupted power supply.

Quitting OPEC

Qatar joined OPEC in 1961 and over the years was a team player in the oil cartel. Their 600,000 barrels per day however, ranked Qatar as one of its smaller oil producers and limited their influence on the direction and decisions of OPEC. In January of 2019, after nearly six decades in the organization, Qatar called it quits.

“Qatar has decided to withdraw its membership from OPEC effective January 2019 and this decision was communicated to OPEC this morning,” Qatar’s Energy Minister Saad Sherida al-Kaabi said at the end of last year. In a Reuters article in December 2018 he was dismissive of the idea that the move was driven by the Saudi’s role in the blockade and the fact that Saudi Arabia is considered by most market watchers as the de facto leader of OPEC.

More likely is that the decision was an economic one. Qatar’s position as the world’s largest seller of Liquified Natural Gas is clearly a higher priority than their relatively modest output of oil. Focusing the bulk of their time, expertise and planning efforts on their strongest possible future is a logical choice.

Ultimately the decision puts Qatar firmly in control of its own destiny. Though the Gulf Crisis was clearly intended to weaken them, Saad al-Kaabi can’t help but make the obvious observation. “The blockade has made Qatar stronger.”

Funding a Prosperous Future

While the natural gas reserves have ample volume to supply the world for the next century, Qatar is taking nothing for granted. They are using the windfall from today’s abundant success to fund education, healthcare and a standard of living that will benefit their people for generations to come. They are investing in a variety of industries worldwide to ensure a varied stream of income. They are developing multiple industries on their own soil, seeking the stability of a diverse economy. Perhaps most importantly, Qatar is investing in human capital at home.

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