Qatar contains the third largest natural gas reserves and the largest non-associated gas field in the world. As an OPEC member, Qatar exports over 400,000 barrels of oil per day, mostly to Japan.

GENERAL BACKGROUND

Qatar's political and economic policies have remained on course under the leadership of Sheikh Hamad bin Khalifa al-Thani, who overthrew his father in a bloodless coup in June 1995. In many respects, the coup was a formal recognition of the 45-year old son's power, as he had been considered Qatar's de facto ruler for many years. International recognition of the new Amir came quickly. In February 1996, an anti-government plot was uncovered, which led to a number of arrests as well as the implication of former Sheikh Khalifa in the conspiracy. Since early 1996, though, Qatar has experienced political stability and continuity.

Between 1972 and 1992, Qatar's gross domestic product (GDP) growth rates averaged 8 percent per year. As with other Persian Gulf countries, Qatar has felt economic pressure from the low oil world prices experienced in the early and mid-1990s. In 1996, GDP rose by an estimated 2.2 percent, up from 1.5 percent in 1995. Qatar's GDP growth rates are expected to be moderate through the end of the decade. Qatar's economy is highly dependent on oil export revenues. In 1996, Qatar earned oil export revenues of about $3.4 billion, or more than 90 percent of the country's total export earnings. In December 1996, Qatar made its first liquefied natural gas (LNG) shipments from its new LNG terminal at Ras Laffan. These new LNG export earnings will represent an important new source of revenue for the next several decades, especially as Qatar's oil reserves begin to decline. The International Monetary Fund recently projected that Qatar would earn $374 million from LNG exports in 1997.

The Qatari government has experienced sizable budget deficits since the mid-1980s. For the 1996/97 fiscal year, which ended in March 1997, the budget deficit was projected at around 27 percent of revenues. The Qatari government recently has implemented fiscal austerity measures as well as a tight monetary policy. Inflation rates also are moderate, with a projected rise in consumer prices of 2.4 percent in 1996, down from 2.7 percent in 1995. The government also is attempting to bring private investment into the economy and to de-regulate the country's financial sector.

In October 1996, Qatar and Bahrain both agreed to let the International Court of Justice (ICJ) resolve their long-standing dispute over the potentially oil-rich Hawar Islands and the Fahst al-Dibal and Jarada sandbars. In May 1993, Bahrain passed a law which decreed its sovereignty over the islands and reefs, some of which are only a mile from Qatar's coast. After Qatar filed a case with the ICJ in February 1994, Bahrain refused to acknowledge the Court's jurisdiction. In February 1995, both sides then requested Saudi mediation outside of the Court. In January 1996, though, Bahrain stated that it would accept the Court's jurisdiction if a related dispute over northwestern Qatar's Zubara region was included in the case. The ancestors of Bahrain's ruling family are buried in Zubara. In August 1996, Oman attempted to mediate the dispute, until Bahrain's subsequent agreement to let the ICJ hear the case. In September 1996, Qatar filed a Law of the Sea complaint against Iran in the United Nations. This complaint centers on Iran's claimed maritime baselines, which use several islands to extend the country's internationally-recognized territorial limits in the Persian Gulf and the Gulf of Oman.

OIL

Qatar has proven, recoverable oil reserves of 3.7 billion barrels, of which about 2.2 billion barrels are located in the onshore Dukhan field. Another proven 1.5 billion barrels are held in offshore fields such as Bul Hanine (690 million barrels), Maydan Mahzam (550 million barrels), and Id al-Shargi North Dome (220 million barrels). It is likely that Qatar's proven oil reserves are higher than current estimates. This is due partly to Arco's newly-discovered al-Rayyan field as well as to the potential for enhanced oil recovery (EOR) at several fields. Qatar contains crude oil with gravities in the 24^o-41^o API range. The country's two primary export streams are Dukhan (41^o API) and Marine (36^o API) blend.

In 1996, Qatar produced an average of 475,000 barrels per day (b/d) of crude oil, up from 450,000 b/d in 1995. The country also produces about 85,000 b/d of lease condensate and other natural gas liquids (NGLs), both of which fall outside Qatar's OPEC crude production quota of 378,000 b/d. Qatar exports almost all of its oil production to Asia. In recent years, close to 70 percent of crude volumes have been sold to Japanese term buyers.

Assuming present annual average crude oil production of around 500,000 b/d, Qatar's oil reserves are expected to last another two decades, or far shorter than other Persian Gulf countries. However, new technology could lead to reserve additions and new output. State-owned Qatar General Petroleum Corporation (QGPC) hopes to boost Qatar's sustainable crude oil production capacity to 700,000 b/d by 2000. This goal does not include NGLs from the North Field, added condensate production from the onshore Dukhan and offshore Bul Hanine fields, or any crude output from other prospects such as the offshore al-Kurkura and A structures, both of which are still under appraisal. Qatar's condensate output is forecast to rise from 35,000 b/d at present to 120,000 b/d by 1999.

Following the 1996 awards resulting from a bidding round for offshore exploration acreage, Qatar's upstream oil sector received a substantial boost in both investment and discoveries. In April 1996, a consortium comprising Chevron (60%) and Hungary's Mol (40%) signed an exploration and production sharing contract (PSC) for Block 1 North-West (1NW), which is adjacent to the North Field. Under the first four-year phase of a 10-year contract period, Chevron plans to conduct 2-D and 3-D seismic work and to drill two exploration wells. Also offshore, Pennzoil has drilled one exploratory well and plans two others in Block 8 near the country's offshore producing area.

Onshore Development

Qatar's oil production comes from one onshore and six offshore fields. The 2.2-billion barrel Dukhan oil field is Qatar's oldest, largest, and only onshore field. The field is divided into four structures: Khatiya; Fahahil; Jaleha; and Diyab. Onshore production from Dukhan rose from 190,000 b/d in 1991 to an estimated 270,000 b/d in 1994. This increase was due partly to the October 1992 start-up of the Diyab structure, which is located on the field's southern flank. Diyab currently produces about 50,000 b/d. Production from this structure is transported to the Jaleha production facilities 14 miles away.

In late 1995, QGPC moved forward with plans to boost Dukhan output from 275,000 b/d in 1996 to 330,000 b/d in 2000. This first entailed an initial refurbishment of the Khatiya, Fahahil, and Jaleha production stations in 1996. In addition, QGPC has formed a partnership with U.K.-based Brown & Root that is called the Dukhan Alliance. This venture will install additional associated gas recovery, processing, and re-injection facilities at the Dukhan field. Gas recovered from the field's Arab-D structure will be treated at a new 600 million cubic feet per day (Mmcf/d) gas processing plant at Khatiya. Dry gas then will be used for re-injection, and the accompanying 45,000 b/d of NGL output will be exported. In 1996, the Dukhan Alliance contracted India's Essar Oil to drill 42 wells in the Dukhan field's Khuff reservoir. These wells will be used in the production of new condensate flows. In September 1996, QGPC awarded a $50-million engineering, procurement, and construction contract to build a degassing plant at the field.

Offshore Development

Qatar's offshore production began in 1964, more than 40 years after the Dukhan field came onstream. Qatar's offshore oil production peaked at 320,000 b/d in 1973, before falling to about 140,000 b/d in 1994. As of April 1997, Qatar's offshore output came from the Id al-Shargi North Dome (85,000 b/d), Bul Hanine (80,000 b/d), Maydan Mahzam (40,000 b/d), al-Shaheen (38,000 b/d), al-Rayyan (32,000 b/d), and al-Khalij (20,000 b/d) fields. Output from Id al-Shargi North Dome, Maydan Mahzam, and Bul Hanine is transported to the Halul Island terminal for blending and export.

In September 1994, Occidental signed a $750-million, 25-year PSC to obtain operatorship of the Id al-Shargi North Dome field. Under the PSC, Occidental contracted to apply EOR techniques and to drill horizontal wells at the field in order to tap the field's Shuaiba reservoir. The Shuaiba reservoir contains in-place reserves of 1.2 billion barrels of crude in a central trap as well as 1 billion barrels of oil in a flank region. In 1996, Occidental drilled a horizontal production well into the flank region and tested both water injection and gas injection in different areas of the formation. In 1996, the company also awarded McDermott a $35-million contract to refurbish the field's platforms. The field currently is producing 85,000 b/d of 29^o API oil, up from 39,000 b/d in 1995 and 20,000 b/d in 1994. Occidental plans to raise Id al-Shargi North Dome's output to 150,000 b/d by 2000. QGPC also is planning development of the Id al-Shargi South Dome field, which shares the same geological formation as Occidental's field. Id al-Shargi South Dome acreage was relinquished by Elf in 1994. Any development of this prospect likely would be tied to Id al-Shargi North Dome's facilities.

In an effort to maintain output, QGPC is undertaking extensive waterflooding and EOR programs at the Bul Hanine and Maydan Mahzam fields. At Bul Hanine, production is expected to be maintained at 70,000 b/d through 2000. Although normal producing formations in this field will have declined to 32,000 b/d by that time, horizontal drilling will have led to the re-development of thin, inaccessible oil-bearing layers. A gas-cap recycling program also will yield increased output of condensate. As of 1996, about 1.2 billion barrels of the field's original in-place reserves of 3 billion barrels had been produced. At Maydan Mahzam, output from presently producing formations is projected to remain level at about 26,000 b/d. However, waterflooding of the deep Arab C and D reservoirs has led to a 5 percent improvement in recovery rates and new production of 15,000 b/d since 1996. Field output of about 40,000 b/d is projected through 2000.

In October 1994, Maersk started commercial production at the al-Shaheen field in Block 5 near Halul Island. Initial output of 20,000 b/d from three wells was later raised to 38,000 b/d in late 1996. This production increase was accomplished with two new horizontal wells. Although al-Shaheen output was originally exported via Halul Island, the field now has its own export facilities, and the 30^o API crude stream is no longer added to Marine export blend. In February 1997, Maersk awarded a $140-million engineering, procurement, and construction contract to Abu Dhabi's National Petroleum Construction Company (NPCC). The contract will involve the construction of a central processing platform and a 100-person accommodation platform by mid-1998. NPCC also is building a flare platform for the field. A Singapore firm is under contract to build additional well-head platforms. With the new platforms, Maersk hopes to raise al-Shaheen production to 75,000 b/d by 2000.

In March 1997, a consortium comprising Elf Aquitaine (55%) and Agip (45%) brought the offshore al-Khalij field online with an output of 20,000 b/d. Located in Block 6 on the Iranian maritime border, al-Khalij contains 200 million barrels of recoverable reserves of 28^o API crude oil. Production is occurring from four wells linked to an unmanned well-head platform. Output is carried via a 27-mile pipeline to the Halul Island export terminal. Crude from the al-Khalij field is mixed with Qatar's Marine export blend prior to shipping. Production from the field is expected to rise to 30,000 b/d by the end of 1997.

In November 1996, a consortium comprising Arco (27.5%), Canada's Gulfstream (27.5%), British Gas (25%), Wintershall (15%), and Preussag Energie (5%)

brought the al-Rayyan field, formerly known as the Arab B structure, online with production of 32,000 b/d. The currently producing oil reservoir at Arab B was discovered in Block 2 in September 1995. Fast-track production occurred with the use of a flexible line connection between a jack-up rig at the field and a tanker moored just offshore. Permanent production platforms and onshore tanker loading facilities are planned during the next several years. These will allow for output to be ramped up to 50,000 b/d by 2000. As of mid-1996, Arab B was thought to hold 1.3 billion barrels of oil in-place, of which 700 million barrels were proven. In addition, the field also contains in-place gas reserves of 65 trillion cubic feet (Tcf), of which 32.2 Tcf are thought to be recoverable. In mid-1996, Qatar was discussing the possibility of sending future gas output from the field via pipeline to Jebel Ali, Dubai.

Also offshore, Qatar shares revenues from the al-Bunduq field with the United Arab Emirates (UAE). Production from al-Bunduq is transported to the UAE's Das Island for export. The field's production and reserves are not applied towards Qatar's OPEC quota, nor are they reported with Qatar's oil data. After a $330-million investment was spent on secondary recovery efforts during the mid-1980's, al-Bunduq has produced about 50,000 b/d since 1989.

Oil, Condensate, and Natural Gas Refining

In mid-1996, Qatar's National Oil Distribution Company (Nodco) confirmed its plans for a $400- million upgrade of the country's 63,000 b/d refinery at Umm Said. Plans include raising output to 83,000 b/d with the addition of a 20,000-b/d fluid catalytic cracker. In addition, a 30,000-b/d condensate unit will be added to the Umm Said refinery. Under a January 1996 deal, U.S.-based Parsons is acting as technical consultant for the project and will oversee all design and engineering work on the refinery expansion, which started in late 1996 and is slated for completion in 1999.

In March 1997, QGPC signed a memorandum of understanding (MOU) with the foreign partners of Qatar Liquefied Natural Gas Company (Qatargas) and Ras Laffan Liquefied Natural Gas Company (Rasgas). This MOU provided for construction of a $340-million, 80,000-b/d condensate refinery at Ras Laffan. After its proposed completion in 2001, the plant will process condensate from the two companies= North Field developments. In 2000, both North Field developments are expected to produce 76,000 b/d of condensate, with 44,000 b/d from Qatargas and 32,000 b/d from Rasgas. Condensate streams from the North Field contain high levels of mercaptan sulfur compounds and consequently are unable to be processed at most refineries.

With its substantial natural gas reserves, Qatar recently has examined the potential related to middle distillate synthesis technology. In October 1996, Exxon finished a feasibility study of the application of this technology in Qatar. The study estimated that a 50,000-100,000- b/d gas-to-oil plant would cost around $1 billion. To achieve this volume of refined products, the plant would

require 500 Mmcf/d of gas. Hypothetical product output would consist of combinations of naphtha, kerosene, and diesel. At present, Exxon is in discussions with QGPC regarding this project. As of April 1997, South Africa's Sasol also was in discussions with QGPC concerning a possible two-train, 20,000-b/d synthetic fuels plant which would be located at Ras Laffan.

NATURAL GAS

With proven reserves of 250 trillion cubic feet (Tcf), Qatar's natural gas resources rank in size behind only Russia's and Iran's. Most of this gas is located in the North Field, which contains 380 Tcf of in-place and 239 Tcf of recoverable reserves. It is the largest known non-associated gas field in the world. In addition, the Dukhan field contains an estimated 5 Tcf of associated and 0.5 Tcf of non-associated gas. Smaller associated gas reserves also are contained in the Id al-Shargi, Maydan Mahzam, Bul Hanine, and al-Rayyan oil fields. The Qatari government believes that the country's economic future lies in developing this vast gas potential. Currently, Qatar has two liquefied natural gas (LNG) projects underway: Qatar LNG Company (Qatargas); and Ras Laffan LNG Company (Rasgas). Also, U.S.-based Enron is discussing a possible third LNG plant. Other gas export possibilities include a gas pipeline to Pakistan.

In 1996, Qatar's natural gas production reached an estimated 1.3 Bcf/d. Almost two-thirds of this amount comes from QGPC's first phase development of the North Field. In late 1991, QGPC brought the North Field online with production of 880 Mmcf/d of gas and 40,000 b/d of condensate. North Field Phase I production facilities include eight linked platforms, two 400 Mmcf/d gas processing trains, two 50-mile pipelines to carry separated dry gas and NGLs to shore, and modified NGL processing plants onshore at Umm Said. More than half of North Field's Phase I gas production is used for domestic industrial consumption, while the remainder is re-injected into the Dukhan field as part of continuing oil recovery efforts.

The Qatargas downstream consortium comprises QGPC (65%), Total (10%), Mobil (10%), Mitsui (7.5%), and Marubeni (7.5%). In December 1996, the Qatargas venture delivered its first shipment of LNG to Japan. The Qatargas LNG plant consists of two 2-million ton per year (Mmt/y) trains costing $2.85 billion. In December 1996, a $570-million loan package was finalized for construction of a third, 2-Mmt/y train. The $130-million offshore construction contract for the third train subsequently was awarded to McDermott. While all Qatargas LNG is contracted to Japanese utilities, Qatar believes that LNG sales to Europe are a possibility in the future, despite heavy competition from Norway, Russia, and Algeria. In 1992, Japan's Chubu Electric signed a sales and purchase agreement (SPA) for the lifting of 4 Mmt/y of Qatargas LNG for 25 years. In January 1995, six other Japanese electric utility companies signed a contract to receive 2 Mmt/y of LNG for 24 years, starting in 1998. A seventh Japanese utility will receive the same amount for 23 years, starting in 1999. Chubu Electric is acting as a buyers' coordinator for these seven utilities. In April 1997, Chubu Electric and Qatargas were discussing LNG pricing issues.

Rasgas is Qatar's second LNG project. Originally a venture between QGPC (70%) and Mobil (30%), the Rasgas consortium now comprises QGPC (63%), Mobil (25%), Itochu (3.5%), Nissho Iwai (3.5%), and Korea Gas Corporation (KGC). In the future, KGC will assign its equity to a number of unspecified Korean firms. Rasgas is planning to build a $3-billion LNG plant with two 2.5-Mmt/y trains by mid-1999. In September 1995, Korea Gas agreed to buy 2.4 Mmt/y for 25 years starting in 1999, with an option to purchase an additional 1.6 Mmt/y. In February 1997, KGC agreed in principle to increase its purchases to 4.8 Mmt/y. A key element of both KGC deals is the elimination of a price floor on LNG shipments. Price floors serve as protection for the seller, and their removal adds financial risk to the project. Presently, Rasgas is attempting to market its LNG to customers such as Japan, Taiwan, China, Turkey, Thailand, and India. As of April 1997, however, only KGC has signed a firm SPA with Rasgas. Assuming another buyer can be found, Rasgas would like to expand the plant to a four-train, 10-Mmt/y facility.

In April 1997, Enron was conducting a third round of talks with QGPC concerning a $4-billion LNG plant that would come online in 1999. Half of the project's 5-Mmt/y yield would be sent to Enron's second phase 2,450-megawatt Dabhol power plant in Gujarat, India. Until late 1996, Enron had anticipated selling the balance of its prospective LNG output to Israel. This proposal was outlined in an October 1995 MOU between Israel and Qatar. However, difficulties with the Middle East peace process reportedly has led to increasing speculation as to whether LNG shipments to Israel are still an option for Enron. In early 1997, Enron also proposed constructing 5-7 new power plants with capacities of 1,000-2,000 megawatts in northern India. All of these proposed plants would then be fueled by Enron's LNG plant. At the time, Enron specified that the Indian government must clear all of the proposed power projects within six months for the project to be viable. Recently, Enron also was considering dropping its LNG scheme all-together, and contracting to Rasgas for LNG supplies to the Dabhol power plant.

Two other non-LNG projects are being developed to utilize North Field gas. In September 1994, Qatar and Pakistan signed a MOU to develop a 1,000-mile, 1.6-Bcf/d gas export pipeline to India. A possible capacity expansion to 3.8 Bcf/d could lead to exports of 2.4 Bcf/d to Pakistan, 0.8 Bcf/d to Dubai, and 0.4 Bcf/d to the northern UAE. The $4-billion pipeline would run along the Iranian coast and eventually could be extended to India. Partners in the project are Sharjah-based Crescent Petroleum, Trans-Canada Pipelines, U.S.-based Brown & Root, and Japan's Itochu. In mid-1996, talks between Pakistan and Qatar reportedly stalled due to pricing issues. Upstream development and previous Qatari gas commitments are other points of discussion.

COUNTRY OVERVIEW
Amir: Major-General Sheikh Hamad bin Khalifa al-Thani
Independence: September 3, 1971 (from United Kingdom)
Population (1996E): 580,000
Location/Size: Persian Gulf/4,416 square miles
Major Cities: Doha (capital), Umm Said, Dukhan, al-Khawr
Languages: Arabic, English
Ethnic Groups: Arab (40%), Pakistani (18%), Indian (18%), Iranian (10%), other (4%)
Religion: Muslim (95%)
Defense (6/95): Army (8,500), Navy (1,800), Air Force (800)

ECONOMIC OVERVIEW
Currency: Riyal
Market Exchange Rate (4/97): US$1 = 3.64 riyals
Gross Domestic Product (GDP - real 1990 dollars)(1996E): $8.0 billion
Real GDP Growth Rate (1996E): 2.2%
Inflation Rate (consumer prices)(1996E): 2.4%
Current Account Balance (1996E): $0.02 billion
Major Trading Partners: Japan, United Kingdom, United States, Italy, Germany, France
Merchandise Exports (1996E): $3.7 billion
Merchandise Imports (1996E): $2.1 billion
Major Export Products: Petroleum products, steel, fertilizers
Major Import Products: Machinery and transport equipment, consumer goods, food, chemicals
Oil Export Revenues (1996E): $3.4 billion
Oil Export Revenues/Total Export Revenues (1996E): 92%
Monetary Reserves (1996E, non-gold): $740 million
Total External Debt (1996E): $2.8 billion

ENERGY OVERVIEW
Minister of Energy and Industry: Sheikh Abdullah bin Hamad al-Attiya
Proven Oil Reserves (1/1/97): 3.7 billion barrels
Oil Production (1996E): 561,000 barrels per day (b/d), of which 475,000 b/d is crude oil
OPEC Crude Oil Production Quota (1H97): 378,000 b/d
Oil Production Capacity (1997E): 610,000 b/d
Oil Consumption (1996E): 45,000 b/d
Crude Oil Refining Capacity (1997): 63,000 b/d
Net Oil Exports (1996E): 516,000 b/d
Major Crude Oil Customers (1996E): Japan (70%), other Far East (10%)
Natural Gas Reserves (1/1/97): 250 trillion cubic feet
Natural Gas Production (1996E): 480 billion cubic feet (Bcf)
Natural Gas Consumption (1996E): 480 Bcf
Electric Generation Capacity (1996E): 1.6 gigawatts
Electricity Production (1996E): 6.1 billion kilowatthours

ENVIRONMENT OVERVIEW
Total Energy Consumption (1995): 0.58 quadrillion Btu
Energy Consumption per Capita (1993): 95 million Btu (vs. 331.8 million Btu in the United States)
Energy-related Carbon Emissions (1995): 8.3 million metric tons (0.1% of world carbon emissions)
Carbon Emissions per Capita (1995): 13.6 metric tons (vs. 5.4 metric tons in the United States)
Major Environmental Issues: Coastal pollution, water depletion, and desertification

OIL AND GAS INDUSTRIES
Organization: Qatar General Petroleum Corporation (QGPC) - exploration and production; National Oil Distribution Company (NODCO) - refining and distribution; Qatar Petrochemical Company (QAPCO) - petrochemical production; Qatar Fertilizer Company (QAFCO) - fertilizer production; Qatar Liquefied Gas Company (Qatargas) and Ras Laffan LNG Company (Rasgas) - production and marketing of liquefied natural gas (LNG)
Major Foreign Oil Company Involvement: Arco, British Petroleum, Chevron, Elf Aquitaine, Enron, Exxon, Marubeni, Mitsui, Mobil, Norsk Hydro, Occidental, Pennzoil, Shell, Sumitomo, Total
Major Ports: Umm Said, Ras Laffan
Producing Oil Fields (production - b/d)(4/97E): Dukhan (275,000), Id al-Shargi North Dome (85,000), Bul Hanine (80,000), Maydan Mahzam (40,000), al-Shaheen (38,000), al-Rayyan (32,000), and al-Khalij (20,000)
Major Pipelines: Dukhan-Umm Said, an offshore network connecting Halul Island to al-Khalij, Bul Hanine, and Maydan Mahzam, and Das Island (U.A.E.)-al-Bunduq
Major Refineries (capacity - b/d): Umm Said (63,000)

Links to other sites:
1997 CIA World Factbook - Qatar
U.S. International Trade Administration, Country Commercial Guide - Qatar
U.S. Department of Energy's Office of Fossil Energy's International section - Qatar
Consular Information Sheet - Qatar from the U.S. Department of State

The following links are provided solely as a service to our customers, and therefore should not be construed as advocating or reflecting any position of the Energy Information Administration (EIA) or the United States Government. In addition, EIA does not guarantee the content or accuracy of any information presented in linked sites.

ArabNet's Qatar Home Page
The Center for Middle Eastern Studies - Qatar
The Country & People of Qatar from Petroserv Limited

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File last modified: May 1, 1997

Contact:

Douglas MacIntyre
dmacinty@eia.doe.gov
Phone: (202)586-1831
Fax: (202)586-9753