Where does Qatar’s gas go?
Since its rise from a little-known, dusty Emirate to the world’s largest exporter of liquid natural gas (LNG), Qatar’s stature and influence in the global energy world has grown exponentially. But where does Qatari gas go? And whose lives does it affect and enrich? The Edge takes a trip around the globe to find out.
Picture a present-day world that is not blessed with Qatar’s oil and, especially, its gas exports.
In Tokyo, Japan, the Sato family watch from their fifth-storey apartment as the lights of the city are dulled for rationing. Without such measures since the 2011 tsunami and the switch-off of the nuclear plants, the family, and all those in the vicinity, do not have enough energy to cook their evening meals.
In London in the United Kingdom (UK), the Smith family gather round their two-bar gas heater for warmth. They are not poor – far from it, Mr. Smith has a well-paid job in finance – but these days, the government cannot provide enough energy to allow him to heat their home.
And finally in Doha, Qatar the Hassan family relax after a day in the heat, glad for the breeze blowing down the wind-catcher. Later the family take a walk to watch the opening of the capital city’s newest major development – a four-storey concrete office building midway around the traffic-free bell-curve of Doha’s Corniche.
‘From camels to Cadillacs’
The above picture of global energy rationing and a dusty desert outpost called Doha is extreme, of course. The world will not be forced to take lifestyle-changing energy conservation measures – not yet anyway – with ample fossil-fuels to supply its energy needs. But how different the world might look today was it not for the vast operations in resource-rich countries such as those in the Arabian Gulf, vital nations that send hydrocarbons to the ends of the earth to power homes, cities and industries.
Without them in Qatar, life as we know it would be unrecognisable. Among the nations, not only blessed with the raw resources and moreover the processing capacity to export them en masse, the oil and gas beneath Qatar is one of the global energy industry’s most valuable natural resources, and mainly with the latter is able to provide power and heat to millions, as well as fund its expansive ambitions as a nation.
“In one generation we went from riding camels to riding Cadillacs,” said then-ruler of Saudi Arabia King Faisal bin Abdulaziz Al Saud in the early 1970s. King Faisal’s famous quote is one that is still arguably applicable today to a number of Gulf states, including Qatar, which have, in less than a generation, transformed their cities from dusty post-colonial outposts to ultra-modern metropolises.
25 trillion - Qatar’s proven natural gas reserves of in cubic metres (tcm), 13 percent of the world total reserves.
Qatar sits on the 13th largest proven oil reserves in the world, and the third largest natural gas reserves behind only Russia and Iran. Doha is reliant on the immense income generated through the extraction of these resources to diversify into an economy capable of sustaining and creating wealth long after the oil and gas are depleted. How Qatar’s oil and gas is used today is vital for the livelihoods of coming generations. For Doha, failure is not an option, and the success of today’s vast operation will be defined by the state of the nation for hundreds of years if not just decades from now.
Qatar’s gas reserves: the figures
The expansive figures relating to the volume of Qatar’s gas reserves, mostly under the waters of the Arabian Gulf in the ‘North Field’, and exports are difficult to absorb. As of January 2013, Qatar held proven natural gas reserves of 25 trillion cubic metres (tcm), 13 percent of the world total, according to BP’s most recent Statistical Review of World Energy. At today’s prices, the value of this gas is sufficient to cover what Qatar has agreed to spend on infrastructure in the build-up to the 2022 FIFA World Cup 151 times over, somewhere in the region of USD8.5 trillion or QAR31 trillion.
In Qatar, production comfortably outweighs consumption. Production last year hit an all-time high of 157 billion cubic metres (bcm), up eight percent from 2011 and five percent of total global production. Of national production, 26 bcm was consumed domestically, less than one percent of global consumption. This supply-demand balance left 131 bcm for export, the vast majority of which, 123 bcm, left the country in the form of natural gas, 19 bcm via pipeline, and 106 bcm loaded aboard liquefied natural gas (LNG) tankers and shipped around the globe.
Growing Asian market
The Asia-Pacific region is the destination for more than half of Qatar’s LNG exports. Vast quantities are shipped to China, India, South Korea and Taiwan, with Thailand emerging as a large customer while Singapore is also set to follow. Japan, however, remains not only the biggest consumer of Qatar’s gas in the Asia-Pacific region, but in the world. The country imported just over 21 bcm from Qatar in 2012 – just over a sixth of Japan’s total LNG imports and enough to fill a large stadium 18,500 times.
The primary use of Qatar gas in Japan is to run the country’s gas-fired power stations, a need that became all the more pressing overnight in the aftermath of the 2011 tsunami and subsequent switch-off of nuclear power plants. As a result fossil fuels accounted for almost 90 percent of Japan’s electricity production last year, up from 60 percent in 2010.
Similarly the UK is one of the largest consumers of Qatar gas, for household heating and centralised power generation. Last year, almost all of the UK’s imported LNG originated in Qatar.
Natural gas from beneath Qatar is the very stuff that contributes to running industrialised nations such as Japan and the UK, powering electric ovens in kitchens across both nations, keeping the famous lights of Tokyo and London burning through the night, and fuelling heaters up and down both countries during the cold, snowy winters.
In light of the United States’ (US) high-profile push to become energy independent via exploitation of its shale gas resources, Qatar has in the last decade increasingly targeted Asian nations to sustain and grow its LNG exports sector.
It may therefore come as a surprise to discover that in 2007 the share of Qatar’s gas exports to the Asian-Pacific nations stood at 78 percent, far above last year’s 53 percent, mainly because of Doha’s production growth. While volumes going into Asia continued to decrease, those going elsewhere, at least until last year, increased proportionally faster, with a fourfold increase going into Europe and a sevenfold increase into North America.
The oil and gas beneath Qatar is one of the global energy industry’s most valuable natural resources able to provide power to millions of people.
But North American exports are set to fall in the next few years, with Qatar National Bank predicting US natural gas independence by 2017. But rather than stand by and watch, Doha has revised its approach and diversified within the sector in the US. Last year, US-based Golden Pass Products, a joint-venture between Qatar Petroleum and US energy major ExxonMobil Corporation, submitted an application to export LNG from an existing terminal in Texas, southern US. This will not be Qatar‘s gas, but the US deal will ensure that Doha is in line for a share of the income derived from any exports.
Indeed, the keyword in Qatar’s push to secure a future without undue reliance on a single economic sector is ‘diversification’, not just beyond of oil and gas as per the 2030 National Vision, but within the hydrocarbon sphere itself. This need has fed into rapid growth in downstream hydrocarbons.
Last year, 6 bcm of natural gas fed into Qatar’s downstream hydrocarbon industries as feedstock prior to export in forms such as liquefied petroleum gas (LPG) or helium. According to the Qatar Statistics Authority, the state exports a vast array of downstream hydrocarbon products, including coal-gas, water-gas, petroleum oils, hydrogen, propane, butane, condensate and rare gases. On a domestic basis, the vast majority of the gas that Qatar consumed in 2012 fed into the nation’s fleet of gas-fired power stations, which dominate the electricity generation mix.
Output from the gas-to-liquid (GTL) sector, which includes liquefied petroleum gas (LPG) as well as products such as kerosene, naphtha and paraffin, is also consumed on a limited domestic basis, although the vast majority is processed for export, with Qatar Petroleum at the centre of the increasingly diverse industry.
GTL is the conversion of natural gas into liquid-based hydrocarbon fuels such as diesel or petrol. Qatar has turned to this area of hydrocarbons to drive growth across its domestic economy in light of a moratorium on further development of upstream infrastructure.
An encyclopaedic entry written just twenty years ago, as Qatar faced dwindling oil production in the aftermath of a blast that ripped apart vital infrastructure, made reference to the Qatar’s North Field and the 4.6 million cubic metres of gas it was believed to hold. It said: “This gloomy outlook is mitigated to some degree by hope for development of the massive natural gas reserves in the North Field. Discovered in 1972 by SCQ [Shell Company-Qatar], its proven reserves … will be productive well into the twenty-first century.”
Today in the 21st, century the North Field is known to hold more than 11 million times the figure quoted just two decades ago, and the outlook for Qatar is considered rather less “gloomy”. Indeed, thanks to this, the scale of Qatar’s hydrocarbon sector is vast – necessarily so, because today’s generation is building not just an industry, but attempting to lay firm economic foundations for the nation of the future.
The repercussions of not doing so are stark. After the then-ruler of Saudi Arabia King Faisal made his Cadillac quip roughly four decades ago, he followed it with a more serious statement, which could be taken as a stern warning for the hydrocarbon rich states of the Gulf, and that is even more pertinent today. “In one generation we went from riding camels to riding Cadillacs. The way we are wasting money, I fear the next generation will be riding camels again.”
Using its global hydrocarbon export empire to fund its National Vision, Doha clearly plans to avoid this dire prophecy.