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QatarEnergy: the company behind World Cup host’s wealth

Saad al-Kaabi, Qatar’s energy minister and chief executive of its national oil and gas group, has criss-crossed the globe in recent weeks, travelling from Namibia to Guyana, Suriname, the US and Egypt.

The energy crisis triggered by Russia’s invasion of Ukraine has led to soaring demand for Qatari liquefied natural gas, supercharging state revenues and cementing QatarEnergy’s position as one of the most important resource companies in the world.

Qatar’s oil and gas revenues surged by two-thirds in the first half of the year to $32bn, according to state media — a windfall that underlines the riches of the tiny Gulf state as it prepares to host the football World Cup.

Since the country of 3mn people was awarded the tournament in 2010 it has poured at least $200bn into new infrastructure, including $6.5bn on stadiums and facilities, largely paid for with revenues from QatarEnergy’s LNG exports.

But if chapter one and chapter two of the company’s evolution focused on developing then maximising domestic gas production for export, “chapter three” will be about QatarEnergy’s international expansion, Kaabi told the Financial Times.

“We’re probably one of the largest blockholders today in exploration . . . and you’ll see that we are going to do more,” Kaabi said. “We are going to be very much in all the businesses that we’ve always been in, but in a much bigger role and much bigger size.”

QatarEnergy has built a sprawling exploration portfolio over the past decade that includes stakes in projects in Brazil, Canada, the US Gulf of Mexico, Guyana, Suriname, Namibia, Egypt, Angola and South Africa.

The company aims to raise its production outside of Qatar from 45,000 barrels of oil equivalent a day to 500,000 boe/d by 2030. Domestically, Qatar produces more than 5mn boe/d, including some oil and a vast amount of LNG.

The international expansion is unusual for a state-owned oil and gas company in the Gulf. While Saudi Aramco and the Abu Dhabi National Oil Company have invested in energy sector projects abroad, neither has pursued international upstream opportunities, focusing instead on maximising domestic production.

While boosting domestic LNG output remained a priority, Kaabi said crude from new finds in countries such as Namibia could provide “versatility” and a source of production outside of gas-focused Qatar. “We want to have a little bit of a mix of oil and gas in our portfolio.”

Such talk is one reason analysts say QatarEnergy is starting to look less like a state-owned gas producer and more like one of its international supermajor partners.

“Monetising Qatar’s gas is always going to be the number one priority, and rightly so, but you can just see some of the tentacles extending,” said Frank Harris at energy consultancy Wood Mackenzie. “In LNG they are starting to look a bit more like Shell or a Total than a national oil company.”

Founded in 1974 as Qatar Petroleum, the state-owned gas giant has often proved willing to take risks. Qatar was highly indebted and edging towards bankruptcy in the early 1990s when its leaders bet on developing LNG for export from Qatar’s North Field — the largest gas reserve in the world.

At the time, Gulf governments traditionally paid less attention to gas in favour of oil and Qatar’s plans were considered a gamble. BP pulled out the project in 1992 saying it did not think it would produce sufficient returns.

Five years later, Qatar inaugurated its first LNG export facility — a partnership with ExxonMobil, TotalEnergies, Mitsui and Marubeni — and in 2006 became the world’s biggest LNG exporter, overtaking Indonesia.

For the next decade, Qatar put a moratorium on new developments in the North Field while it completed existing projects. At the same time it focused on becoming one of the world’s most reliable providers of energy, almost never missing an LNG shipment to a customer.

“They have been extremely, extremely efficient,” said Leo Kabouche, an LNG analyst at consultants Energy Aspects.

Doha then took another big bet in 2017, lifting the moratorium and announcing huge expansion plans, just as some world leaders were talking about how to leave fossil fuels behind.

The move triggered a multiyear beauty parade of the biggest international oil companies competing to partner in the coveted expansion. As part of that process, energy majors including Shell and Total invited QatarEnergy to join their projects in other parts of the world, thereby helping the company to expand internationally.

“In the beginning, when everybody wanted to showcase what they can help us with, we actually told them that we would measure people by how much they support QatarEnergy in that area,” Kaabi said.

Over time QatarEnergy has become a useful partner to those foreign companies, Kaabi said, not least because of the Gulf state’s growing diplomatic influence around the world.

“In my view we’ve given a lot of these companies a lot of boost by us being there because of our government-to-government relationships.”

The model appears to have worked for all parties. QatarEnergy has built a global portfolio of exploration partnerships, and Shell, Exxon, ConocoPhilips, Total and Eni have all signed new deals in the North Field that will help boost Qatar’s domestic LNG production capacity from 77mn tonnes a year to 126mn tonnes by 2027.

A partnership with Exxon in the US called Golden Pass will provide a further 16mn tonnes of LNG a year from 2025.

The company is diversifying, investing in petrochemical production and solar energy in Qatar. However, unlike its publicly listed partners, QatarEnergy has not set net zero emissions targets for its operations.

Kaabi, who said there was no plan to list QatarEnergy “in the foreseeable future”, argues that natural gas, which emits significant carbon when burnt but less than oil and coal, should be central to the world’s energy transition.

“I agree with going green, but I always say gas is not a transition fuel, it is a destination fuel. If you look at the base load of electricity in the world, it’s either going to be gas, or nuclear for the ones that accept to have nuclear and can afford it. [The] rest is going to be some fuel oils and a lot of renewables.”

Among its most prospective international opportunities are two blocks off the coast of Namibia, where the company’s respective partners, Shell and Total, have both found oil in the past 12 months.

For a company such as London-listed Shell, under pressure from activists and some investors to cut oil production, advancing a project in a country with no history of oil production will prove contentious. Kaabi said QatarEnergy would proceed regardless.

“If it’s commercial and we believe in it and they do not want to develop, we will look for other partners to develop it.”

So far QatarEnergy has tended to rely on partners to operate its international projects. That could become more challenging as pressure intensifies on listed oil and gas companies to cease activity, particularly in new frontiers.

“I don’t think we’ll run out of companies that will want to be the operator, but eventually at some point, I think we need to be an operator,” Kaabi said.

Video: Qatar’s World Cup legacy | FT Scoreboard

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