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Business Recorder: Qatar’s natural gas city offers to power the world

EXTRACT: The cooling process is carried out by state company Qatar Petroleum and its unit Ras Laffan Liquefied Natural Gas Company Limited, in partnership with international oil companies, including ExxonMobil, ConocoPhillips and Royal Dutch Shell.

REUTERS ARTICLE

BY BARBARA LEWIS AND ODAI SIRRI

ARTICLE (July 22 2006): For those worried about world energy supplies, a trip to the huge gas processing centre at Ras Laffan in Qatar’s desert might offer reassurance — but it’s also unsettling. The statistics are as overwhelming as the mile upon mile of steel tubing, shimmering like a mirage in the desert heat.

About 80 km (50 miles) north of the Qatari capital Doha, Ras Laffan Industrial City stretches over more than 100 sq km (39 sq miles). In June, the latest of a series of mega-projects came onstream, taking investment to more than $80 billion and raising production of Liquefied Natural Gas (LNG) — deemed vital to meeting escalating energy demand — to 25 million tonnes a year.

But Ras Laffan is not immune to security concerns that have pushed oil prices higher or to a skills shortage found across the energy industry. For now, government officials in the tiny Gulf Arab state are focusing on the achievements of their LNG projects.

“This is a big success story for us,” Qatari Oil Minister Abdullah al-Attiyah told Reuters. “Our target is to reach 77 million tonnes by 2011,” he said, adding that by then Qatar would be the world’s biggest exporter of LNG. Qatar’s LNG is drawn from its giant North Field.

Energy experts believe the reserve is the world’s largest single field of non-associated gas, or gas from a reservoir that does not contain significant quantities of crude oil.

Cooled to minus 259 degrees Fahrenheit (minus 161 degrees Celsius), LNG resembles boiling water and, unlike conventional gas, which relies on pipelines for delivery, it can be shipped to markets around the world.

The cooling process is carried out by state company Qatar Petroleum and its unit Ras Laffan Liquefied Natural Gas Company Limited, in partnership with international oil companies, including ExxonMobil, ConocoPhillips and Royal Dutch Shell.

The first LNG cargo sailed from Ras Laffan to Japan in 1996. LNG from Ras Laffan is now also bound for Spain, South Korea and India and, by around 2009, should also be reaching Britain, Italy, France, Taiwan and the United States.

As well as exporting LNG, Ras Laffan will also ship gas in other forms, including around 180,000 barrels per day by 2011 of gas to liquids (GTL), used to make products like diesel.

“It’s highly impressive to go from the first cargo in 1996 and around 10 years later to become the world’s biggest exporter of LNG,” said Frank Harris, LNG analyst at Wood Mackenzie.

Cargoes are shipped out of the world’s largest LNG exporting port, alongside the industrial city. The port is still under construction and has yet to acquire the feel of a bustling harbour. As elsewhere in Ras Laffan, human beings are conspicuous by their absence.

Often the only signs of people are the abandoned bicycles, used by Ras Laffan workers to travel the huge distances of the vast, purpose-built industrial park. Many of the 20,000-strong workforce live in camps, while engineers and administrators tend to live in the nearest city of Al Khor, which is being developed into a tourist resort.

And getting enough qualified staff is one of Qatar’s challenges as it works to boost production. An engineer met by Reuters during a visit said he would have retired, but had been persuaded to stay on because of the shortage of oil specialists.

Shortage of expertise is, to an extent, a problem throughout the energy sector, but it is acute in this tiny Gulf Arab state with a native population of only around 150,000.

The petrochemical industry has, however, lured people from all over the world, many of whom are manual labourers from the Indian subcontinent. They have helped take the total population to around 850,000. Another issue is security.

The North Field — which covers 6,000 sq km (2,317 sq miles) and holds 20 percent of the world’s proven gas reserves — borders on Iran, which is locked in a battle of words with the West about its nuclear programme.

Concerns about possible disruption of Iranian oil supplies are among factors that have helped to push the price of oil to record levels. Qatar’s oil minister insists security is tight. He also brushed aside concerns that rising costs, inflated by a surge in prices for base metals used in building infrastructure, could deter potential investors.

“We built all our LNG terminals at the right time so we are not worried about market issues,” Attiyah said. But any future growth will have to be measured and Qatar will not embark on a second wave of expansion unless it is certain it would not compromise the North Field’s lifespan, the minister has said.

“We have to be very careful (with the North Field),” he said. “We have to pay a lot of attention to the reservoir, we don’t want to damage it.” It’s a legitimate concern, but analysts also point out that limiting access to Qatar’s now highly sought-after reserves will give Qatar even more bargaining power when the time comes to seek partners to extract the next generation of LNG.

Copyright Reuters, 2006
 

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