Few seemed to know much about the tiny Gulf state, and a local travel guide warned him it was the most boring place in the Middle East.
Today, Qatar has vaulted into the energy world’s big league. Its construction crane-dotted skyline still struggles to draw tourists, but it has hooked a much bigger fish: Big Oil.
Barely the size of Connecticut, Qatar is home to the world’s third biggest gas reserves after Russia and Iran, and has emerged as a new frontier in Big Oil’s quest for natural gas to boost reserves and make up for flagging production elsewhere.
Royal Dutch Shell, ConocoPhillips and France’s Total are among the big names who have invested in Qatar, but the major with perhaps the most at stake here is Exxon, the world’s largest publicly traded oil company.
Qatar forms not only the backbone of Exxon’s natural gas ambitions, but will be a key driver of overall production growth in the coming years for the Irving, Texas company.
“This country would probably be in the top three, maybe top five countries for us to have the most money invested in by the end of the decade,” Harms, who oversees Exxon’s operations in Qatar, said in an interview. “It’s on a steep growth profile.”
Through its stakes in two mega-projects, Qatargas and Rasgas, Exxon has already invested billions of dollars to develop Qatar’s natural gas reserves into super-cooled liquefied natural gas (LNG) to be shipped to Europe, Asia and the United States.
And it plans to spend billions more over the next few years on other initiatives including a petrochemicals complex and a $7 billion project developing a cleaner diesel fuel.
Even as Qatar shapes Exxon’s future, critics say the company’s widespread clout is leading to something of an “Exxon Mobilisation” of the country.
Exxon’s reach extends deep in the fast growing nation, where it sponsors tennis tournaments, horse races and prominent community initiatives.
“When you are this big and powerful, it can be a double-edged sword,” said a top Western oil official, who declined to be named. “It creates some frustration because people think they are too powerful.”
Harms dismisses those concerns, saying Exxon is happy with the relationship it has with Qatar. In Exxon’s trademark low-key style, the company’s office in Doha does not even boast a large sign bearing its name.
Low-key or not, Qatar’s influence on Exxon’s operations is already massive — years before hitting peak production.
In 2004, Qatar accounted for almost all the reserves the company managed to replace that year — a key figure watched by analysts as an indication of long-term prospects.
Qatar’s big impact on Exxon’s reserve replacement ratio is expected to continue over the next couple of years as new trains from its LNG projects come on-line, Harms said.
“We’re in a phase right now in the company where Qatar is a big piece,” he said. “Last year it was a very high percentage of reserve replacement and it’ll probably be that way for a while because we’re spending a lot of money and building a lot of projects here.”
By the end of the decade, Qatar will account for 30 per cent of Exxon’s natural gas production — no small amount in a company that is already the world’s largest non-government producer of natural gas.
Qatar did not show up on Exxon’s radar just because of its vast energy wealth.
The country set itself apart from Middle Eastern peers like Saudi Arabia by actively seeking out investment from Western oil majors. It also boasts a strategic location and offers political stability and the assurance that contracts will be honoured to the letter, says Harms.
“You give me countries with those three things and the list is very, very short,” he said.
Qatar’s key attraction is its lack of surprises — particularly important at a time when Europe frets about the recent gas dispute between Russia and Ukraine that has threatened natural gas exports into the region. Still, business in Qatar is not without risks.
Natural gas prices are at historic highs now as demand soars and supply declines in key markets like the United States.
A drop in prices could make LNG exports from Qatar uneconomic — shipping costs alone account for more than half the cost of natural gas sent to the United States, Harms said.
Then, there’s the question of security, although so far Qatar has not suffered from the kind of major attacks that have plagued other countries in the Middle East.“So the track record is really good. But if I’m worried about something then sure, those are the kinds of things that I’m worried about,” said Harms. “Maybe it’s unfounded worry.”
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The project also features, at a height of 263 metres, the highest solar energy tower on the planet
The official reception ceremonies include a 21-gun artillery salute in honour of the visit and a flypast by the UAE Air Force aerobatics team Al Fursan