Qatar expands oil extraction plans
Qatar’s crude oil extraction activities are showing no signs of slowing as a huge rig makes it way to the nation.
Qatar-based hydrocarbon extraction giant Gulf Drilling International (GDI) has taken a major step in its bid to expand its oil business, taking delivery of what is, in the words of the energy ministry “one of the most technologically advanced offshore drilling rigs to ever work in the State of Qatar.” The expansion looks set to coincide with a boost in Doha’s oil related income, because crude oil export revenues are expected to far exceed overly-conservative price assumptions set by the Ministry of Economy and Finance in its budget for the ongoing fiscal period, according to the Qatar National Bank (QNB) Group.
At the end of April, GDI took delivery of the Al Jassra rig. The facility, which is being transferred from Singapore to Qatar, is the first of three new offshore rigs being built for GDI by Singaporean shipyard PPL for GDI. The company aims to add seven new rigs to its fleet by the end of next year.
QAR270 billion - Total estimated revenue of Qatar from oil exports during the current fiscal year.
Al Khaliji Commercial Bank played a major role in financing the rig, which GDI estimates cost QAR900 million to put into service. “Our contribution further fuels the ongoing development of Qatar’s economy,” the banking group’s CEO Robin McCall said, “We expect Al Khaliji to play an even larger role in this sector as the State of Qatar continues to drive its diversification plans.”
Al Jassra will drill super-deep wells that are needed to exploit long, thin reservoirs of crude oil in the Al Shaheen field, Qatar’s largest offshore oil reserve. It will be operated jointly by GDI and Maersk Qatar Oil.
“We expect GDI’s expansion plans to contribute significantly to the increased revenues of [GDI parent company] Gulf International Services,” energy minister Mohammed bin Saleh Al Sada said.
Qatar will see revenue totalling almost QAR270 billion from oil exports during the ongoing fiscal year, according to a statement from the QNB Group, because the global oil price will average USD107 (QAR390) per barrel between the start of April this year and the end of March next year. The figure stands 65 percent higher than the cautious USD65 per barrel that the government based its budget on.
Qatar’s crude oil export revenues are expected to far exceed overly-conservative price assumptions.
This, QNB Group revealed, will pave the way for estimated revenue that stands just over QAR50 billion in excess of the ministry’s forecast of QAR218 billion, which will leave room for significantly higher spending than planned, stating that Qatar, as with most GCC countries, tends to spend considerably more than budgeted as these are based on conservative oil price assumptions.
The specific oil price that is of most relevance to Doha is of Qatar Land Crude Oil (QLCO). The black gold is extracted from the country’s largest active oil field, the Dukhan onshore field, which is home to three oil reservoirs along an 80 kilometre stretch near the west coast of the peninsula. Prices have been relatively high for a sustained period of time in recent months (see graph).
At the time of writing, QLCO was valued just under USD104 (QAR379) per barrel. The Dukhan field can produce up to 335,000 barrels of crude oil per day, which at today’s prices is equivalent to daily revenue of QAR127 million.