‘We Are Not Aggressive Enough’: Qatar Energy Minister Speaks With MEES

Q: You’re approaching the end of your first year as minister. What were your key priorities upon appointment?

A: The ministerial position and the head of Qatar Petroleum had been together in the same place for 25 years. It was only three or four years ago that they were separated, so it’s just back to the norm that we had always had in the past. Nothing different.

The main job is the CEO of Qatar Petroleum, which is charged with all of the oil and gas business. When you bring it together with the ministerial role, it makes it more focused, because everybody knows who to speak to.

The QP CEO normally runs the business, and when they are the minister as well, it provides the link with the government and the cabinet.

It’s really much more efficient [to combine the roles]. And having oversight of electricity is really the only added role to my previous responsibility.

Of course, the international representation of Qatar as a minister is also another role. As CEO I represented QP in oil and gas, and if you see the oil and gas community, you often see the ministers with the CEOs in the same place, so it’s really just a title and a representation.

You are meeting counterparts, and that gives you a little bit more obligation to do some of the governmental work than before. I think it pushes our oil and gas business even further and gives me more room to do my job, better for my country.

Q: One thing you did very quickly was withdrawing from Opec. How has that been? Any regrets? What are the positives for you?

A: It was something we were studying before I was appointed, it’s just that the decision was made after I was appointed. But I had been studying that for a while, for a few months before I was appointed.

And then after we had studied the pros and cons, whether or not we wanted to do it, it just so happened that I was appointed minister and pushed it forward. It was really my project of looking at that.

Q: What have been the advantages for you?

A: No regrets. No regrets at all.

ON QP’S INTERNATIONAL EXPANSION

Q: When we spoke two years ago [MEES, 8 December 2017], one of your key points of focus was that QP would be transformed beyond all recognition through an international expansion.

A: Did we do that?

Q: You certainly have done.

A: OK, good. I normally deliver, I don’t talk much and when I talk, I say what I want to do and then we go and deliver it.

Q: You have delivered, and how has that process been for QP?

A: It is going very well. One of the key things that I was able to achieve very successfully is to surround myself with excellent leadership teams. I have a great team at QP, and I have a great team of leaders in all of our subsidiaries. It’s through collaborative teamwork that we were able to use the solid foundation that we created after we merged companies and reformed our business internally, solidified right-sized organizations, merged Qatargas and Rasgas, brought in the marketing, brought in QPI [Qatar Petroleum International].

So after doing that, choosing the right management team and having a great leadership team with me in QP and outside QP, and with excellent employees from more than 85 countries, all together we were able to use that as a springboard to implement that plan that I talked about. And I think we have done it very successfully because of that teamwork and collaboration.

Q: Are you more or less where you want to be now, in terms of the number of assets that you have internationally?

A: Not really. We have done a lot but we are still moving forward, we are not done.

Q: One of the notable areas that you are absent from is the US upstream. Is that something that you are prioritizing moving into?

A: We have worked on entering the US upstream, but if you notice what we are doing, is we announce results. We don’t announce what discussions we are in. Because some of these companies are listed and so on. Just the way we are set up is we want to be very confidential and discreet with what we do. When we finish something, we go ahead.

We’ve worked on many projects around the world, including the US, where we have gone all the way to the end and then it’s that last 1% of not agreeing on the contract, or liabilities, or the price, or whatever. And then you just walk away. And we have had many of those around the world, where we have really gone all the way to finalizing something.

To me our objective is to create best value for QP and for Qatar. And it has to be something that is sustainable and we think can be profitable for the long term within the strategy that we have, and the principles that we stand for.

We have done a lot of work, we have done petrochemicals in the US, LNG export project in the US, but the upstream we are still working on.

Q: You do see advantages of having a more integrated presence in the US? Adding the upstream to your projects there.

A: We are going to have this, it’s just a matter of time. For the integration of LNG if you are talking about Golden Pass [MEES, 8 February], we have five more years to go until we have production, so even if I wanted to buy it [an upstream stake] to have a hedge of production, I have until five years’ time.

Q: You’ve had some exploration successes, like South Africa and Cyprus [MEES, 1 March].

A: And Guyana [MEES, 20 September].

Q: And Guyana, yes. What’s the next step in terms of bringing some of these assets on line?

A: As you know, when you find discoveries, there is a process that you go through. To appraise, put a development plan in place and get the right approvals from the state you are working with, or your partners. The whole objective is to have development, it’s not to find and sell. We are a long-term player.

Q: Do you have any particular targets that you are setting in terms of production goals, timeframes?

A: Production we have already set a goal, of reaching 6.5mn barrels [per day] of oil equivalent. We are at 4.8mn currently. So a part of that is international.

Q:What share of that do you expect to come from overseas?

A: It’s very difficult to assess. We have a target, but we don’t talk about splits because things can get changed a little bit. But we are moving forward. I am happy where we are currently.

Q: What are the key advantages of having this international presence? Is it to reduce geographic risk?

A: It’s basically growth of our portfolio. We are an upstream company, and like any international company we are looking for additional reserves. And when you find reserves you add value. We want to be with the main players, we don’t see ourselves as a national oil company per se anymore, we look at ourselves as like any other IOC. We always say we want to be one of the best, if not the best national oil company. I think we are very close to being the best, and we are becoming more international than just a national oil company.

The way we are set up as far as anticorruption, ethics, procedures, governance, all that, we are an independent oil and gas company working in Qatar, with a board, governance and so on; no government influence on our business. We are doing it purely on a business basis, and that is how our leader wants to see QP.

I think if you talk to all of the international companies that have worked with us, they see that the anticorruption, the ethics, the sanctity of contract, the principles we stand for, are very much like theirs.

ON NORTH FIELD EXPANSION

Q: Moving to the domestic front, clearly all eyes are on the North Field Expansion project. Have you decided which foreign partners, if any, you will be bringing on board?

A: There is a process that we have put in place, which will look at select companies that we have invited. We have given them the chance to give us bids showing what they can add to our project.

Q: How many companies have you invited?

A: I don’t want to say specifically, but it is just a few. They will then compete to give us the best offer, and based on that, we will select who will come in.

Q: What are the key parameters you are looking at? Is it technical expertise? Ability to market volumes?

A: It’s really a wide range of what can they offer us. Maybe what can they offer us from a marketing point of view? What can they offer us technically? Technically is maybe the least as we are already in the final stage of just awarding the last contract, which is the onshore EPC [MEES, 19 April]. We don’t need much more.

Q: When do you envision that EPC contract being awarded?

A: Probably the first quarter of 2020. We have the tenders in, the technical bids. It is just a process.

Q: And you’re looking to award one EPC for all of the trains?

A: Yes, for the trains it will be one EPC. But we have several EPCs, the trains is one, then there is the offsite, it is probably three or four onshore tenders that have been floated. But the LNG trains themselves, the main trains are one tender.

Q: The project as a whole, what is the cost of development?

A: We don’t want to talk about that now, we will announce it when we are done. Because you are waiting for EPC contracts to come in, and until then you are waiting on the numbers. Everyone has a guess on what it is. We have a rough idea where we are.

Q: You mentioned previously that if you wished to, you can finance it yourselves.

A: We are financing it ourselves. We’ve spent billions to get it to where we are today, with all the contracts, such as for eight rigs.

Q: You are still targeting 2024 for the first startup? Would that be phased?

A: Yes, 2024. It is dependent on what the contractors come in with, normally it is three to six months or something like that, because the contractors would have a schedule, like we did in the past. You don’t bring four trains online at the same time.

Q: So possibly over two years?

A: No, no, it should be less. It is difficult for me to say, but let’s see what happens.

ON LNG MARKETING

Q: With the North Field expansion, Golden Pass, and the expiry of existing long-term contracts, you are going to have a lot of LNG volumes to place on the market in the coming years. What’s your strategy?

A: We have a strong marketing team. We are going to market it, and we are working on it. You will see us announce what we are going to do in due course.

Q: Do you see any particular countries as key growth markets?

A: Asia basically, all of Asia, everybody’s growing gas there, so we are targeting the entirety of Asia. Europe has a huge requirement in the future, with everybody looking to replace coal, and nuclear in some places, and to have a strategy for CO2 reduction, and reduction of other emissions. One of the very strong solutions is using gas. Gas is going to be needed in a lot of places, and we are hopefully going to be there for that.

Q: You recently signed a deal to supply Zeebrugge in Belgium, and are supplying more to the UK. You see Europe as central to your growth?

A: We are going to serve all the markets. Europe is a very important market to us today: UK, Poland, you know, Italy, Spain, Belgium, these are all our markets. We are going to have huge volumes as you said, so Europe is going to be a market, Asia is going to be a market, wherever there is going to be a purchase of gas you are going to find us there.

Q: Do you see your LNG volumes coming online at the right time in terms of the debates on the energy transition?

A: I think that when we took the decision to expand it was a very good time to go. I think there is a slump now in LNG, [but] everybody feels that there will be a requirement for more supply in 2024-2027. Everybody has a different number, but we know there is going to be a requirement in the future.

And for you to build these trains, from the time you say ‘I want to expand’ until you actually have it online, it takes five-to-seven years. If you take all the engineering and construction it is probably seven years. So if you didn’t start in 2017, you won’t be there for 2024.

You have to go, you have to make sure that you are going to be efficient in your construction, and make sure that you are maintaining a low cost of production to outweigh any market waves.

Q: You’ve spoken recently about QP’s ‘green’ credentials, with the CO2 capture project [MEES, 11 October]. Do you see this as an area where you possibly have an advantage over some rival producers?

A: I think there is no doubt that the awareness of the environmental impact of CO2 emissions, and other emissions, has come to the forefront. For us in QP, we have been doing a lot of work on flare reduction, methane reduction, over the last ten years. It’s not something that we have just done now. Even the announcement we just made is that we have started CO2 injection already at 2.5mn tons per year.

This is something we already do now, not just saying I want to do it tomorrow. This is something that started way back for us, and all the recent environmental uproar had nothing to do with this.

To design the four trains that we will be building, this was done in the pre-FEED, you can’t just engineer it just like that. This was already done and is in the tenders already. It’s basically our base case of how we are going to produce. We have allocated where the wells are going to be, it is going to be sequestration into very deep underwater aquifers. The plan is already set up and it is something we seriously believe in. It’s not something we are just doing.

For the environmental side, we think that Qatar as the largest LNG producer, we have already helped a lot of countries get rid of diesel and coal and so on. We have done a lot for the world community in being a gas producer that sells the cleanest fossil fuel.

But this is just us saying that we are taking responsibility. We are not a listed company, we don’t have people, green advocates, standing outside my office. We are advocates, we have a responsibility. If you heard what His Highness said in the UN climate change accords, he believes in climate protection and the protection of our environment in a very big way. He was thrilled to see what we are doing.

We are probably going to spend $100-200mn on CO2 sequestration, and we are doing it out of us being responsible rather than us being forced to. And we are going to announce our total plan for environmental protection and people will be shocked.

Q: When will that be announced?

A: I’m not sure. We are taking time because we want to be sure that we do a good job. You see, we never say something that has any risk of being wrong. When I speak about something, the whole organization is behind it, we have studied it thoroughly. Talking too much about something, hyping what you want to do, is not useful for anybody. If you are going to do it, go do it, work on it and deliver. And when you have delivered, then you talk about it.

So that’s the methodology of our work. And then you have credibility. I think that today when I say I am going to do something for QP, people believe me, because there is a track record.

Q: With the carbon capture, you are reinjecting it, but are you just storing it or using it for EOR?

A: The one I announced and what we are currently doing is purely sequestration. We have another project that we will also talk about, which is EOR with CO2, but which has nothing to do with the first one.

We have a pipeline that we are building across the country to pilot CO2 injection for our oilfield in Dukhan. We are collecting the CO2 from the gas production to do that.

I see that as a cheat if you see what I mean, because I am trying to gain money from it, and also you are not really keeping it in the ground because you are recycling it over the lifecycle, bringing it back up. So if I talk about that as responsible activity I would not feel as honest. Although you are getting rid of some of the CO2 it is not something that I would take credit for.

Q: One last thing on LNG markets, there is a lot of debate currently about how they are evolving, with less of a role for long term contracts. How do you see the market evolving?

A: That is a big debate, with people looking at different things from different perspectives. The reason people say that, is that a lot of people in the US have taken the decision to proceed without a market. Now, the big players can do that. Us and Exxon Mobil can do that [at Golden Pass]. I think that a lot of the investors that are smaller, just developers, a few can go ahead, but how many will be bankable in the future without a market?

The long-term deals, are not just long-term security for the supplier, they are also long-term security of supply for the buyers. A lot of them have a national requirement, it is a national security issue, and once you get infrastructure and you put something in place for gas because you have environmental responsibility or just the need for energy, then you don’t have an alternative. Once you set it up, it is difficult to go back and say ‘I’m not going to have gas anymore’.

I think the majority will be long term contracts, and some will be people riding the spot market. But the spot market will burn a lot of people. I don’t know how that could be something they will survive long term.

Q: I’ve heard from some people that you are considering establishing an LNG trading exchange, are you looking at this?

A: As I mentioned to you, when we are ready to announce something it is after we have done it.

Q: You’ve also had some movement towards LNG bunkering, but progress is slow.

A: We just announced a joint venture with Shell [MEES, 20 September], and we are going to soon announce locations where we will be building bunkering facilities.

Q: You envision multiple locations globally?

A: We have selected locations already. It is just the partners agreeing which is the best location to start off with. I’m not sure how many, but at least a couple will be announced soon.

Q: Do you see there being much demand?

A: I think it will pick up, but us and Shell are the biggest producers in the world and when we dive into this and have that available for the shipping community, it will pick up.

ON QP’S DOWNSTREAM STRATEGY

Q: Chevron Phillips was recently awarded the big petchems project here [MEES, 28 June]. What exactly is it that they bring to the table?

A: It was a competition that we put in place between them and some other select companies, and they won the competition fair and square. And in addition to that, they invited us to be partners with them in the US. We have a 2mn ton [per year] project in the US, and in Qatar it is about 1.9mn, we may grow it actually, we will see.

Anyway, [these are] about the largest size ethane crackers that you could find in the world. Each one is about $8bn, so we are making a big investment. Some people looked at us as only upstream players for some reason, although we have a huge petrochemicals industry, and aluminum and steel, fertilizers. Chevron Phillips is already present here.

We were already going to increase here, but I think they were shocked, because they saw us say we are going to be involved with 4mn tons of petrochemicals in one go. It was a shock to people: ‘Oh, QP is still in chemicals’. We’ve never left chemicals, we have always been in chemicals and we always will be in chemicals. We just need to find the right project that is feasible for us and suits our strategy.

Q: Why did you go down the ethane cracker route, why not mixed-feed? You have abundant feedstock for either.

A: Ethane crackers are far more economic and efficient than mixed-feed crackers. Mixed-feed crackers, I think they work better in areas where you have the market close to you. You can build it cheaper, it becomes more feasible. Building it in places where there is a big market demand for those products, and you can have further downstream industries there, it makes much more sense.

That is why you see them in China, for instance. And some of the places where it works in the region, it’s because it is subsidized feedstock. We don’t subsidize. Anything you subsidize, you can make it work. That is a fictitious economy, it is not real business. We work on real business only.

Q: Do you envision any further petchems plants in Qatar after this?

A: Possibly, possibly more yes. But it depends what we do with other businesses. We are probably going to do some revamps or upgrades, building newer plants in some of our existing companies. We will see.

We are working on a lot of things.

Q: Would these be at Ras Laffan, or Mesaieed, or both?

A: We are looking at both. But one of these days you will hear what we have done, we are not idle with any of our business.

Q: You mentioned the US petchems plant [MEES, 19 July], do you plan any more overseas downstream projects?

A: Not really, no. Downstream is not something big outside Qatar that we are looking at. It is not something that we are looking to go big with overseas. It is just some situations where we find there is a benefit of doing it.

With this one, there was a very big benefit for us to proceed. It is with a good partner [Chevron Phillips] who we know and have worked with. There is a situation in the US where the feedstock is very abundant, it is at a reasonable price, and the market is there and we can export to other areas from the US.

It is a good fit for us. It is an opportunity that came about and we took the decision to proceed, it is not something that we actually looked to do. It was specific circumstances.

Q: With the international expansion as a whole, how are you finding allocating resources? It is a huge expansion, staffing wise how is that?

A: I think it is managed very well. We are increasing staffing for projects, the base organization doesn’t change. When we have a project that we want to do, we build project teams specifically for that project, after it is done it winds down.

We have projects like that, in the majority like the chemicals project in the US, we are depending on our partner to basically build it: he’s the operator and has the expertise. We give support, there are boards, there are different things, we can second people, it is not a big challenge.

Human resources in general is a big challenge, but not specifically because of our growth. We have huge plans for development of talent, of people, of locals, and recruitment of the best people from around the world. That is a continuous challenge, how do you attract the best people, the best workforce? We have an obligation for locals to be developed through the ranks and system, but also we have a huge international community.

Q: Some of these projects you’ve been involved with for a couple of years now. Have you seen many advantages in terms of what you’ve been able to bring back from these projects?

A: Most of it is upstream, and that is mostly geoscience and drilling. There isn’t much of a difference when you look at a project that you are going to drill offshore Qatar versus offshore Brazil, in the sense of the reservoir – the rocks are rocks, the drilling methodologies are the same. The only difference that is big is you drill from a drill ship in Brazil in 3,000ms depth, rather than a drilling jacket in 40ms [off Qatar]. These kinds of things are different, but reservoirs are reservoirs, production is production, and drilling is drilling.

You learn a lot about the logistics, the setting and so on, and I think you bring back a lot from that. But we have always been in a model of having IOCs work with us, and so that sharing of knowledge has always happened, whether it’s in Qatar or over there. It’s the same thing, except that instead of the joint venture being in Qatar, the joint venture is in Brazil or somewhere else. It is that simple.

ON QATAR’S CRUDE & CONDENSATE PLANS

Q: Qatar is also a huge condensate exporter, with more coming online through the North Field expansion. You’ve previously said you’re not planning any new condensate splitters, is that still the case?

A: No, no we are not. This is not a hugely profitable business, refining is not very beneficial for us and so it is not something that we want to do more of. Today we sell diesel, naphtha and gasoline and it is very important for us as it is for the national requirement. It gives us self-sufficiency of jet fuel, gasoline and diesel for years to come, but doing more is not necessary.

Q: Speaking of self-sufficiency, you recently announced the supply of low sulfur fuel oil bunkers [MEES, 25 October]. This is also imported I assume?

A: True, we are buying low sulfur fuel oil from the market. We have the facilities to store it here. After the blockade we decided that we should have our own bunkering, and you can buy it easily.

We went ahead of time, because we wanted to set up everything and actually have it functioning. We have done trial runs, and once we were ready we announced it. As I told you, we work on things, then announce the results. I think people in the shipping community appreciated that we were ready.

Anybody who wants to get IMO-compliant fuel, they can stop by and get it. It is mostly people calling at Ras Laffan or Doha who would stop by. We are not in a main shipping lane. But it is very important for our customers who come with their own ships to pick up condensate, LPG, LNG and so on.

Q: You have consolidated most of the oil fields in Qatar now under QP.

A: True, most recently with Idd al-Sharghi [MEES, 11 October], yes.

Q:What are the benefits of this?

A: We have the capability to do it on our own. And if I don’t need an external partner to manage it with me and I can manage it fine, then why shouldn’t I? We have a very large operating organization. We basically took all of the operations people who were in that organization which Oxy has left, and offered them a job. Some of them took the job, some left, the majority actually took the offer. We basically gave a blanket offer to everyone, I didn’t want people to be fired because of our decision. We just said we will take everybody and they are already employees of QP.

Of course, the revenue for the country becomes much larger.

Q: Gas of course is your mainstay, but do you have plans to expand crude production capacity at all?

A: These are very old fields, where you have late-life developments if you will. We are doing our best to extend these plateaus and basically do the best projects that can increase production, or at least maintain production. But this is not something that will change the needle, because these are not huge fields and are at a very mature stage of their life. We need to take care of them and get the maximum out of them in the right, efficient way.

Q: The plan is for Qatar to maintain capacity at current levels then?

A: Yes, similar to what we have today, it could decline a bit and if it does that is just because of old reservoirs.

Q: You mentioned the EOR plan at Dukhan, again that is about maintaining current levels?

A: That is to maintain, but it is long term. You do a pilot first, test that, and if it works you go to full-fledged CO2 injection. You’re talking a 10-year horizon, but everything that we are doing is looking at things on a long-term perspective. I keep telling my management team, our job is to have the next CEO enjoy QP.

Q: What is long term for you?

A: My long-term view is a thirty-year plan for Qatar. Twenty to thirty years.

Q: Finally, what are your priorities for 2020? Are there any new projects you want to flag up?

A: I have a lot of exciting things in 2019, after we finish in 2019 then we will think about 2020. We are not done with 2019 yet.

Q: What’s still to come in 2019 then?

A: Stay tuned. We have a lot of exciting things happening. Our strategy is to grow and I see that we are not aggressive enough in our growth strategy, and that makes my guys go crazy.

Q: That includes the last two years? You’ve been pretty aggressive in that period.

A: No, I think we need to step it up further.

Interview conducted by Senior Editor Jamie Ingram in Doha on 24 October.