According to OGJ, Qatar’s proven natural gas reserves stood at 910.5 trillion cubic feet (Tcf) as of January 2007, about 15 percent of total world reserves and the third-largest in the world behind Russia and Iran (see the Russia and Iran Country Analysis Briefs for more information). Most of Qatar’s natural gas is located in the massive offshore North Field, which holds more than 900 Tcf of proven natural gas reserves and is the world’s largest non-associated natural gas field. The North Field is a geological extension of Iran’s South Pars field, which holds an additional 280 Tcf of recoverable natural gas reserves.

Qatar’s natural gas production has grown significantly during the last decade. In 2005, preliminary data shows that Qatar produced 1,536 billion cubic feet (Bcf) of natural gas, or more than three times the 1995 output of 477 Bcf. Preliminary data puts Qatar’s natural gas consumption at 579 Bcf in 2005.

During 2005, the country exported 987 Bcf of natural gas, all of which was liquefied natural gas (LNG), making Qatar a leading world LNG supplier for the year. In the future, Qatar will also export natural gas via pipeline, as part of the Dolphin Project.

In 1997, Qatar began exporting LNG when it sent small amounts (5.7 Bcf, or about 120,000 metric tons) of LNG to Spain. In 2005, Qatar exported 987 Bcf (20.1 million metric tons, or MMt) of LNG, or 14.5 percent of all globally traded LNG. Of this amount, 316 Bcf (6.5 MMt) went to Japan, 293 Bcf (6.0 MMt) to South Korea, 213 Bcf (4.4 MMt) to India, 161 Bcf (3.3 MMt) to Spain, and 3 Bcf (less than 0.1 MMt) to the United States.

During 2006, industry reports suggest that Qatar surpassed Indonesia to become the world’s largest LNG exporter, partly as a result of problems Indonesia faced in obtaining natural gas feedstock (see the Indonesia Country Analysis Brief for more information). In March 2007, Qatar solidified its leading role in world LNG markets when RasGas completed its fifth LNG production train, giving the country 30.7 MMt (1.5 Tcf) of annual liquefaction capacity, the most in the world. Based on existing plans, Qatar is expected to increase its LNG production capacity to 77 MMt/y (3.8 Tcf/y) by 2012 (see table below).

Qatar is part of the Dolphin Project, which aims to connect the natural gas networks of Oman, the United Arab Emirates (UAE), and Qatar with the first cross-border natural gas pipeline in the Gulf Arab region (see the UAE and Oman Country Analysis Briefs for more information). The project is being developed by Dolphin Energy, a consortium owned by Mubadala Development Company on behalf of the Abu Dhabi government (51 percent), Total (24.5 percent), and Occidental Petroleum (24.5 percent). A company spokesperson announced in early March 2007 that it had began testing its natural gas receiving and distribution facilities in the UAE, and that it expected to begin full commercial operations in June 2007. The pipeline currently sends 400 MMcf/d of natural gas supplies from Qatar to the UAE and Oman, and Dolphin Energy expects this volume to reach 2 Bcf/d by the end of 2007. The company is also in discussions with the Qatari government to expand the sendout capacity of the pipeline to 3.2 Bcf/d, depending on the availability of additional natural gas supplies from the North Field.

Qatar plans to significantly expand natural gas production during the next five years. Qatari officials have stated that target production for 2012 is about 8.7 Tcf, or nearly six times greater than 2005 output levels. The expected increase in natural gas production will fuel the growing natural gas requirements of domestic industry, LNG export commitments, piped natural gas exports through the Dolphin pipeline, and several large-scale gas-to-liquids (GTL) projects.

The bulk of Qatar’s expected future increases in natural gas production will come from projects related to the massive North Field. In 2005, Qatari government officials became worried that the North Field’s natural gas reserves were being developed too quickly, which could reduce pressure in the field’s reservoirs and possibly damage its long-term production potential. In early 2005, the government placed a moratorium on additional natural gas development projects at the North Field pending the results of a study of the field’s reservoirs. This assessment is not expected to be completed until after 2009, which means that no new projects are likely to be signed before 2010. However, this freeze did not affect projects that were approved or underway before the moratorium, which are expected to add significantly to Qatar’s natural gas supply in the next five years.

In November 2005, ExxonMobil started production at the Al Khaleej block in the North Field at a rate of 750 million cubic feet per day (MMcf/d). In July 2006, the company announced a $3-billion plan to expand this output to 1.6 Bcf/d by 2009, which will be used to fuel power plants and industrial customers in Ras Laffan, the RasGas LNG project, and as feedstock at the Oryx Gas-to-Liquids (GTL) Project. ExxonMobil is the largest foreign investor in development projects at Qatar’s North Field. Aside from Al Khaleej, the company is also involved in increasing natural gas supplies for the RasGas and Qatargas LNG projects, each of which will rely on significant increases in output from the North Field over the next several years (see the LNG Section below for additional details).

Gas-to-liquids technology uses a refining process to turn natural gas into liquid fuels such as low-sulfur diesel and naphtha, among other products. GTL projects have received significant attention in Qatar over the last several years, and Qatar’s government had originally set a target of developing 400,000 bbl/d of GTL capacity by 2012. However, project cancellations and delays since the North Field reserve assessment has substantially lowered this target. In February 2007, ExxonMobil announced that it had cancelled its planned Palm GTL project due to rising costs. The Palm project was originally slated to produce 154,000 bbl/d of liquids for export, although estimated costs spiraled from $7 billion to $15 billion according to industry estimates. The company will instead develop the Barzan Gas Project in the North Field, which is scheduled to supply 1.5 Bcf/d of natural gas to Qatar’s domestic market beginning in 2012, when the Barzan field comes online.

By 2012, Qatar is likely to have 177,000 bbl/d of GTL capacity at two facilities: the Oryx GTL plant and the Pearl GTL project. Oryx GTL is a joint-venture of QP (51 percent) and Sasol-Chevron GTL (49 percent), and has the capacity to produce 34,000 bbl/d of liquid fuels. The plant was formally commissioned in June 2006, but technical problems prevented the consortium from loading the first export cargo until April 2007. The Oryx project uses about 330 MMcf/d of natural gas feedstock from the Al Khaleej field. Depending on the outcome of the North Field reservoir study, Oryx GTL may choose to expand production capacity of the plant in the future.

In February 2007, the same week that ExxonMobil decided to cancel its GTL plans, Shell held a groundbreaking ceremony for its Pearl GTL Project. The Pearl plant will be 51 percent-owned by QP, though Shell will act as the operator of the project with a 49 percent stake. The facility is expected to use 1.6 Bcf/d of natural gas feedstock to produce 140,000 bbl/d of GTL products as well as 120,000 bbl/d of associated condensate and LPG. The Pearl GTL project will be developed in phases, with 70,000 bbl/d of GTL product capacity expected by 2010 and a second phase expected in 2011. Like the Palm project, Shell’s Pearl GTL initiative has experienced significant cost escalation. Originally estimated at $4 billion, industry sources believe the Pearl facility will now cost between $12 and $18 billion. The Pearl project will be the first integrated GTL operation in the world, meaning it will have upstream natural gas production integrated with the onshore conversion plant.

As in the oil sector, QP plays a dominant role in Qatar’s natural gas sector. QP is a leading upstream producer of natural gas and also plays an important role in downstream projects. Most new natural gas developments in Qatar tend to be large-scale projects linked to LNG exports or the promotion of downstream industries that utilize natural gas as feedstock. Therefore, foreign company involvement has favored IOCs with the technology and experience in integrated mega-projects, including ExxonMobil, Shell, and Total.

Qatar’s LNG sector is dominated by Qatar LNG Company (Qatargas) and Ras Laffan LNG Company (RasGas). RasGas is 70 percent-owned by QP and 30 percent-owned by ExxonMobil, while the Qatargas consortium includes QP, Total, ExxonMobil, Mitsui, Marubeni, ConocoPhillips, and Shell. In each case, the exact equity structure varies from project to project. The LNG companies handle all upstream to downstream natural gas transportation themselves, while the Qatar Gas Transport Company (known as “Nakilat”, which means carriers in Arabic) is responsible for shipping Qatari LNG.