Posts Tagged ‘Qatar’

Qatar also signed an initial agreement with local Chinese authorities, the Chinese state-run oil company C.N.P.C. and Royal Dutch Shell to be part of a petrochemical and refining complex in China, the world’s second-biggest oil consuming nation.

Wednesday 7/12/2011 December

Royal Dutch Shell has spent $20bn in Qatar in the last five years, which is a real reflection of the country’s business climate, said executive officer Peter Voser.

“Thus we got engaged in bringing technology and knowledge into the country,” Voser said.

Recently, Qatar embraced its vision to be the world’s leader in gas-to-liquids technology by inaugurating the world’s largest Pearl GTL project in Ras Laffan, a Qatar-Shell joint venture.

“All these achievements have become possible here in Qatar because of HH the Emir’s visionary leadership,” Voser said. – Pratap John

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DECEMBER 5, 2011

DOHA (Dow Jones)–Royal Dutch Shell PLC (RDSB.LN) is in the early stages of planning projects to turn natural gas into fuels like diesel in the U.S., of similar scale to its huge project in Qatar, Andy Brown, executive vice president of Shell, said in Qatar Monday.

“We are looking for places where gas is cheap and [oil] products are expensive,” he said at a press briefing at the World Petroleum Congress in Doha, Qatar. “Clearly the U.S. is something we’re looking at.”

Shell is only interested in large-scale projects similar to the $18 billion Pearl Gas To Liquids plant it has developed in Qatar, Brown said.

The first phase of Pearl GTL is now producing at close to full capacity and the second phase started over the weekend, he said. It remains on course to reach full production by the middle of 2012.

-By James Herron, james.herron@dowjones.com, +44 207 842 9317

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By Robert Tuttle – Dec 4, 2011 3:54 PM GMT

Qatar Petroleum and Royal Dutch Shell Plc (RDSA) signed a heads of agreement to develop a petrochemicals plant in the Gulf country for an estimated cost of $6.4 billion.

State-run Qatar Petroleum will have an 80 percent stake in the project and Shell the remainder, the companies said today in Doha. They plan to sign a final joint-venture agreement by the end of next year or early in 2013, Qatari Oil Minister Mohammed al-Sada told reporters in the country’s capital. The project would be completed in 2017, he said.

The Shell venture would not replace one that Exxon Mobil Corp. (XOM) proposed two year ago, and the country plans more petrochemicals projects, al-Sada said. He estimated the Shell complex’s costs at $6.4 billion. OPEC-member Qatar is the world’s largest exporter of liquefied natural gas.

The heads of agreement sets the scope and commercial principals for the project, which would include a steam cracker and a mono-ethylene glycol plant with a capacity of 1.5 million metric tons a year, Qatar Petroleum and Shell said in a statement. The complex would be able to produce 300,000 tons a year of linear alpha olefins, they said.

To contact the reporter on this story: Robert Tuttle in Doha at rtuttle@bloomberg.net

To contact the editor responsible for this story: Bruce Stanley at bstanley5@bloomberg.net

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Sun, 04 December 2011

By A Staff Reporter – MUSCAT — Royal Dutch Shell’s Chief Executive, Peter Voser, has hosted 190 of his most senior management colleagues, at the luxury Shangri-La Hotel in Muscat.

The executives gathered with government dignitaries and business luminaries from around the world to discuss Shell’s global strategy and to celebrate a year of achievements.

The annual meeting, known as the 2011 Senior Executive Forum and usually held in Europe or North America, lasted for three days last month.

Shell is intent on becoming the world’s most competitive and innovative energy company and the event focused on driving greater competitiveness, technological innovation and leadership.

In the past year, Shell has finished building the world’s largest GTL plant, Pearl, in Qatar. Shell has also announced plans to build the world’s first floating liquefied natural gas plant (FLNG) off Australia’s north-west coast.

Shell is a joint venture partner with PDO (34 per cent), Oman LNG (30 per cent) and Shell Oman Marketing Company (49 per cent). Oman was chosen as the location for this year’s gathering to signal Shell’s commitment to the country as well as the company’s appreciation for the longstanding working relationship between the two parties.

Speaking to delegates at the opening ceremony, Peter Voser, Shell’s Chief Executive Officer, said: “We are proud of our relationship with Oman, its leadership and the Omani people. We are especially proud of the development of our joint ventures, which have contributed to the growth of the Omani economy and the development of this great nation.”

Peter Voser and other Shell executives met with a wide range of senior Omani guests from Government, businesses and NGOs. There was much lively discussion then and YB Senator Dato’ Sri Idris Jala, Minister in the Malaysian Prime Minister’s Office and Chief Executive Officer, PEMANDU, spoke about “enhancing the role that governments and private enterprise play in developing countries, in contributing to the growth and well being of the economy, in a rapidly evolving world”

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By The Associated Press  | November 22, 2011

The Anglo-Dutch energy giant and state-owned PetroChina have teamed up to get gas out of the ground in China—and to tap new sources of energy worldwide

November 16, 2011, 11:10 PM EST

By Stanley Reed and Dexter Roberts

The hilltop city of Yulin, about 500 miles southwest of Beijing, was once a strong point in the defensive wall that protected the Chinese heartland from the tribes to the north. An ancient fortress survives in the old part of the city, the Chinese characters for “Suppress the Barbarians” carved over its gate. Today, Yulin’s a boomtown in the oil- and gas-rich Ordos Basin. In the streets not far from the fortress walls, where men sell roasted goat heads from carts, young boys hand out brochures for apartment towers built for newly wealthy oil workers and coal miners. If fresh characters were carved into the old fortress gates now, they might say “Resource Barbarians Welcome!” Or they might simply be a pair of corporate logos: one for PetroChina (PTR), the publicly traded wing of CNPC, China’s largest oil company, and a second for its foreign partner, Royal Dutch Shell, the second-largest Western oil company.

A half-hour drive from the city is a new, white building that stands out in the desert scrubland. Clean and bright, it has offices, conference rooms, and a big second-floor terrace overlooking acres of neatly arranged tanks and piping. This is the Changbei gas field. An estimated $1.3 billion joint venture, the field is managed by Shell for PetroChina and produces more than 3 billion cubic meters of gas a year. Over a lunch of stir-fried chicken and snow peas, tangy local peaches, and green tea in the building’s high-ceilinged commissary, the plant’s two bosses, General Manager Xu Lin, a Shell man, and PetroChina veteran Xu Yanming, his deputy, banter about Changbei. Xu Yanming, dressed more like a local merchant than an oil man—in slacks and a dark windbreaker—ribs Shell’s Xu, who has a degree from Oxford University and wears the standard blue, one-piece Changbei boiler suit.

“Shell has had four managers—and the whole time it has just been me,” Xu Yanming says. An earlier Shell manager, whom he dubbed a yangren—old-fashioned slang for Westerner—assumed ridiculously high costs, including $20 per diems for Chinese staff. Shell had also factored in exorbitant costs for water. “Some at Changbei think PetroChina had stronger cost controls than Shell,” Xu Yanming chuckles.

Changbei is the most visible playing field for a tricky high-stakes game Shell has entered into with the Chinese behemoth, an engagement that mirrors the larger global shift of power from the big petro majors to the fast-rising national oil companies. PetroChina wants Shell’s expertise to unlock the unconventional gas and oil resources, such as shale gas, that require new techniques to extract. Shell wants PetroChina’s help in gaining access to the mainland, China’s newly hot gas fields, and its energy-hungry consumers. The U.S. Energy Information Administration said in April that Chinese shale may hold 1,275 trillion cubic feet of gas, 12 times the country’s conventional natural gas. The “technically recoverable” reserves are almost 50 percent greater than the 862 trillion cubic feet estimated for the U.S., the EIA also said.

Last year, China became the largest energy consumer in the world, surpassing the U.S., according to BP’s (BP) Statistical Review of World Energy. China is expected to account for almost half the world’s growth in oil consumption in the next two decades, becoming the largest market for oil, and it is trying to more than double the use of gas in its economy, to 8 percent of the energy mix, by 2015.

Shell isn’t just angling for the natural gas and domestic Chinese market. As China and Asia surge in importance, the company wants to use its Chinese partnerships to help gain influence over the flow of all global resources destined for China, from the Middle East to Australia. “It is a foreshadowing of the new energy landscape,” says a former Shell executive. “If you asked Shell 15 years ago if they would do a strategic partnership with CNPC, they would have laughed.”

No one’s laughing now. The company is going all out to please Beijing. In June company directors visited Changbei and the Iron Man Wang Jinxi Memorial Hall, a shrine to an iconic 1960s oil worker, at PetroChina’s largest field, Daqing. Shell executives believe they’ve picked a winner in PetroChina. “This is the most advanced Chinese alliance; this is about the future,” says Jerry Kepes, a partner at the Washington (D.C.) energy consultant PFC Energy. “Shell gets it. But Shell has to deliver.” The relationship carries plenty of risk. For Shell, it’s that once PetroChina has absorbed its know-how, it will become a competitor that not only will take Shell’s share of the business but also will one day attempt to swallow the Anglo-Dutch giant whole.

The Chinese have long known there was gas in Changbei, but they didn’t think they had the skills or technology to extract it. So they went looking for a partner that did. Even though the pair seemed to be made for each other—both are gigantic, bureaucratic, and eager to be top players—CNPC and Shell courted for more than a decade before getting serious in the late ’90s. “It was like getting elephants to dance,” says a banker who negotiated deals between them.

The two companies signed a production-sharing agreement in 1999, but Shell’s bosses dithered on giving the final go-ahead for investment. Shell executives changed their minds when China lifted gas prices and the market outlook improved. At roughly the same time, the company spurned an invitation to participate in the $12 billion West-East Gas Pipeline that China wanted to build to bring gas to its major cities. Shell’s management did not think the terms were adequate. “It became clear that we did not share the same priorities and expectations,” says Shell Chief Financial Officer Simon Henry. Some insiders were dismayed at passing on the chance to be an owner of China’s most important piece of gas infrastructure. “That was incredibly shortsighted and stupid,” says a former Shell executive. “That was an opportunity to own 40 percent of the spine of China’s gas market.” Shell is very cautious, and its top managers didn’t give the green light on Changbei until 2005, after lower-level executives warned management the oil giant was on the verge of losing the deal, and another great opportunity.

Since then, Shell’s expertise, coupled with PetroChina labor, has made Changbei work. The field’s gas is “tight,” meaning it’s trapped in rocks that don’t easily give up their treasure. Shell solved the problem with horizontal wells that level off when they reach the gas, which is deposited in layers about 10,000 feet below the surface. A two-pronged pipeline is then drilled out from the bottom of the well horizontally for about 6,000 feet so that the well can suck gas from a huge expanse of rock. So much gas flows into these pipes that Changbei’s fields are highly prolific.

Before teaming up with Shell, PetroChina used to take more than 250 days to drill a well like this. Now it takes about 130 days, slashing costs on the 25 wells that have been drilled so far from about $17 million to $10 million each. Xu Lin says rock-bottom development costs of less than $1 per barrel of oil-equivalent make Changbei highly profitable. Although Shell won’t disclose the profitability of the project, one analyst, who asked for anonymity due to fear of repercussions, estimated that it earned at least a 30 percent return.

While noteworthy, Changbei is merely the first step of a much larger plan. Shell, which has only $4 billion or so invested in China—tiny, considering the size of China’s economy—wants to be China’s energy concierge, catering to the oil and gas industry’s needs. CNPC is the only avenue available to fulfill such ambitions.

The breakthrough in Shell’s China strategy occurred in August 2009 at a meeting held in the Hague, where Shell has its headquarters. Peter Voser had recently become Shell’s chief executive officer and had cut short his vacation to meet with a CNPC delegation led by Chairman Jiang Jiemin. The chemistry was good between Jiang and Voser, a hard-nosed Swiss who has instilled more financial discipline at the once loosely managed conglomerate. Since then, meetings have occurred every few months, either in the Hague or at CNPC’s 25-story headquarters in Beijing’s Dongcheng district, in a conference room one Shell executive says is “the size of an aircraft hangar.”

These meetings resemble high-level diplomatic summits more than business negotiations—not surprising, perhaps, given the size of the respective companies. The chairman of CNPC, which has more than 1.5 million people on the payroll and revenue of $271 billion, is more like the governor of a major province than a CEO of a company. Each session follows the same format. The CEOs sit at the top end of a horseshoe-shaped table and converse through an interpreter hidden by a huge arrangement of flowers. Aides sit along the sides of the horseshoe. The CEOs reach agreements in principle on ideas to pursue and signal to aides to work out the details before the next meeting three or four months later. Invariably there are lunches and dinners and drinks. The talks recently have been enlivened by the fiery Chinese liquor Maotai. Every executive is expected to drain a toast to each person present, with no half measures tolerated.

Shell executives have warmed to Jiang because he appears to be receptive to their ideas, unlike some of his counterparts at state companies. CEOs of Chinese state companies are political animals whose decisions aren’t driven strictly by profit motive. “These are talented, tenacious people that should not be underestimated—but at the end of the day they are still government functionaries,” says Jeff Layman, a partner at law firm Baker Botts in Beijing. “They may be looking at their futures beyond the companies they are managing.”

The powwows between the two companies have produced a list of projects, some of which are already under way. If they all come to fruition, they could be investing $50 billion together, not only in China but also in Qatar, Australia, and elsewhere over the next decade or so. Shell also let CNPC into a small joint venture in Syria that the Chinese company hoped would be an entrée into the Arab world. The deal has fizzled, and Shell is no longer lifting crude since the Syrian regime was hit with international sanctions following its bloody crackdown on dissidents.

For Shell executives, this elaborate courting of the Chinese reflects a growing awareness of the energy market’s new realities. Forty years ago major Western oil companies such as Shell controlled more than 60 percent of the world’s oil reserves. Thanks to waves of nationalizations and depletion of oil fields in the West, the producing countries now control the bulk of that oil. With few exceptions, the only way to make an impact in such places—whether Venezuela, Russia, or Abu Dhabi—is through partnerships with the national oil companies. China is the biggest of these. According to Xinhua, China’s official news agency, China plans to invest $828 billion in its power industry by 2015, developing oil and gas fields, building refineries and pipelines across the country, and adding power plants, wind farms, and nuclear reactors. Green energy production is a priority because China also wants to cut carbon emissions and reduce the energy intensity of its economy by 2015.

PetroChina’s plans are ambitious, too, and its objective is clear: It wants to be on the level of Shell someday and is pushing its partner to help it become a global player. For instance, Shell sponsors a leadership development program for senior Chinese executives run by Peter Nolan, a professor at the Judge Business School at the University of Cambridge. The company supplies materials and speakers for the program to build relationships with the Chinese executives and prepare them to work on joint ventures. A former Shell executive in China says the Chinese are eager to hold seminars with their Western counterparts, not just to learn about technology but also to talk about issues such as corporate governance. PetroChina executives have even visited the Hague to learn how Shell complies with U.S. Securities and Exchange Commission regulations.

The big question is: Can Shell keep riding this tiger? What prevents PetroChina’s parent, CNPC, from exploiting the Western producer for what it wants and then tossing it aside or perhaps even taking it over? For now, CNPC appears content to see what it can gain through the partnership. Shell CFO Henry, who manages the PetroChina relationship, said in an interview that there is a quid pro quo for being permitted to work in China: helping the Chinese company acquire oil and gas resources outside of China. Qatar, the little emirate that is the world’s leading gas exporter, is a place where Shell is playing the energy concierge with considerable skill. In 2008 the company sold more than one-third of the output of its Qatargas 4 plant in Qatar to PetroChina in long-term contracts.

That deal impressed Shell’s majority partner in the project, Qatar Petroleum, and has led to two others: Shell, Qatar Petroleum, and PetroChina are planning a refinery and petrochemical complex in China’s southeastern Zhejiang province. And Shell has brought in PetroChina as a 25 percent partner to explore for yet more gas in Qatar. If that arrangement yields a big find, it could lead to a new $10 billion to $15 billion liquefied natural gas plant. “This tripartite relationship is important to us,” says Andy Brown, Shell’s Qatar chief. “We can play a role between a major energy-producing country and a major energy-consuming one.”

Shell is delivering not only in Qatar but also on Curtis Island, a 30-by-15-mile strip of land within Australia’s Great Barrier Reef World Heritage area. In 2010 it joined forces with PetroChina to buy Arrow Energy for A$3.6 billion ($3.7 billion). Arrow has plans to build a $20 billion LNG plant to feed gas to China. Henry says being able to buy an energy company in a developed country such as Australia earned Shell “huge Brownie points.”

Still, the long-term risk remains that PetroChina will learn to develop even difficult oil and gas fields with the aid of technology-rich service companies such as Schlumberger (SLB) and Halliburton (HAL), then kiss Shell goodbye. “Even though Shell has been clever in leveraging its position, you can’t ignore the fact: You are now partnered up with the guy who doesn’t want to be partnered with you long-term,” says a former executive. “CNPC is not in this to be a partner with Shell. They want to be Shell. They want to replace you.” That’s the thing about the energy game in China: Sooner or later, someone has to lose.

With James Paton

Reed is a reporter-at-large for Bloomberg News and Bloomberg Businessweek. Roberts is Bloomberg Businessweek‘s Asia News Editor and China bureau chief.

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The oil giant handles budgets and projects of a size that would daunt nation states. The difference is that it need answer to no one … and it’s running a huge surplus

Posted by Terry Macalister Thursday 27 October 2011 13.08 BST The Guardian

What European leader would not want to swap places with Shell boss Peter Voser? He has just doubled the company’s profits in the third quarter, amassed $30bn (£18.7bn) of cash over the last nine months and is now buying back shares at the rate of $800m every three months for want to anything better to do with the money.

Voser has the advantage of having everything to gain from higher energy prices. The social and political fallout from rising fuel poverty and mutinous motorists rarely touches the parallel universe that is Shell Centre in London.

Are there any Shell-shaped worries, then? Well, one of them – in a wider world of growing unemployment, of course – is concern about wage inflation. Shell frets that there is so much activity in the energy sector that it is having to fork out more and more to secure project managers and petroleum engineers.

Voser also has the advantage over the likes of embattled Greek premier George Papandreou in that he can switch spending from one country to another. Unsurprisingly, Shell has not much confidence in Europe: only 15% of
the company’s investment is located this part of the world with 85% elsewhere – increasingly in high-growth Asia.

And how to deal with any worsening financial crisis in the eurozone? Well, the company has just sold its last UK refinery – Stanlow in Cheshire – and says it expects to further reduce its overall investment in Europe as time goes on. The bulk of Shell’s $30bn per annum capital expenditure is going elsewhere – in North America, the Middle East and Asia Pacific.

Also, unlike European political leaders, Voser does not have to worry about global warming or meeting carbon targets. Some of the company’s cash is being pumped into dirty tar sands production in Canada – which is pleasing the Ottawa government if not making any new friends in the environmental movement.

But Shell is also bulking up an already world-leading position in the cleaner gas
market, particularly the liquefied natural gas sector.

And even oil companies do have to make some tough decisions. The cost
of investing in a big scheme – say the Pearl gas-to-liquids project in Qatar, for example – is more than the final bill for building the Channel Tunnel singlehanded. It is unlikely Voser would get away with letting the costs for that scheme double to £10bn, as happened with the rail link.

One oil analyst described Shell as “ticking like a Swiss watch”. That might be true. But it also relies on $100-a-barrel oil prices – and if the sovereign debt crisis triggered a double-dip recession, we might hear the company squawking like a cuckoo clock.

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Thu Oct 13, 2011 12:47am EDT

* Planned JV won initial approval, pending final green light

* Imported condensate eyed as feedstock for petchem

BEIJING, Oct 13 (Reuters) – A proposed refinery, a petrochemical joint venture between China’s CNPC, Royal Dutch Shell Plc and Qatar, this week signed a framework deal with local authorities in eastern China’s Zhejiang province where the mega project will be built.

The project, to include a 400,000-barrel-per-day oil refining and 1.2 million tonnes-per-year ethylene plant, won initial approval from the National Development and Reform Commission, the country’s macro planner, in June, industry officials have said.

Pending final government approval, which also includes an environmental clearance, the greenfield refinery would give Shell and Qatar their first solid foothold in the world’s No.2 oil consumer, which is embarking on a refinery building boom.

The Taizhou venture, in coastal Zhejiang province, will use imported condensate and other raw materials to produce ethylene and other petrochemicals, CNPC said in a company newspaper.

“The agreement further clarifies work scope and targets for each side, reflecting sincere intentions to cooperate,” it said.

In January, Qatar Oil Minister Abdullah al-Attiyah and Wang Yong, head of the state-owned Assets Supervision and Administration Commission (SASAC), which is both a regulator and shareholder in most of China’s big state-owned companies, pledged to strengthen cooperation in the oil and gas sector and discussed the Taizhou project.

Industry experts told Reuters that the project, likely to cost close to $10 billion, would be led by Shell on the foreign partners’ side. Such an alliance follows a giant supply agreement between Qatar and China.

“The project looks promising to win Chinese government’s final blessing, as China may see Qatar quite a stabilising factor among the Middle East resource nations,” said an industry veteran.

CNPC is parent of PetroChina , Asia’s top oil and gas firm.

In May 2010, CNPC and Qatar Petroleum signed a 30-year deal for gas exploration and production in Qatar, holder of the world’s third-largest gas reserves. Shell, as operator, will hold a 75 percent equity stake, with CNPC holding the remainder.

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By Brian Swint – Jun 13, 2011 8:56 AM GMT+0100