Qatar to merge Qatar­gas, RasGas

Kuwait Times - - BUSINESS -

DOHA: Qatar will merge sta­te­owned liq­ue­fied nat­u­ral gas pro­duc­ers Qatar­gas and RasGas Co Ltd, the chief ex­ec­u­tive of Qatar Pe­tro­leum (QP) said yes­ter­day, in the Gulf state’s lat­est re­ac­tion to lower en­ergy prices. The morethan-two-year slump in oil prices has forced Gulf coun­tries to re­duce state spend­ing and con­sider con­sol­i­da­tions as a way to cut costs: among the big­gest be­ing Abu Dhabi’s merg­ing of Mubadala and In­ter­na­tional Pe­tro­leum De­vel­op­ment Co.

While Qatar is more fo­cused on gas than oil, it too has been forced into re­or­gan­i­sa­tions, with QP al­ready go­ing through a process that re­duced staffing and ear­marked a num­ber of as­sets for di­vest­ment. The tie-up of Qatar­gas and RasGas, Qatar’s num­ber one and two LNG pro­duc­ers re­spec­tively, has been talked about for a num­ber of years stretch­ing back be­fore the oil price re­duc­tion. At a news con­fer­ence, QP CEO Saad AlKaabi said that be­hind the an­nounce­ment was an el­e­ment of want­ing to cut costs.

“Of course as an out­come of this cost re­duc­tion will be re­al­ized, it will make us more com­pet­i­tive in the mar­ket,” he said, adding that the move would save “hun­dreds of mil­lions of dol­lars”, with­out giv­ing a time­frame for the sav­ings. “It’s one busi­ness that will do the same thing. Putting it all (in) one place gives you a much big­ger ad­van­tage in mar­ket­ing.”

The tran­si­tion, which will re­sult in a sin­gle com­pany called Qatar­gas, will take around 12 months to com­plete and will be­gin be­fore the end of this year.

Once the new struc­ture is in place, some ar­eas of the busi­ness could see job cuts, al­though the op­er­a­tional side of the plants will not be af­fected, Kaabi said.

A Doha-based en­ergy an­a­lyst said the move was in line with QP’s re­cent cost cut­ting but also had other ben­e­fits. “Ar­guably the rea­sons for hav­ing two firms - to deal with western and eastern mar­kets and also to en­cour­age some com­pe­ti­tion dur­ing the roll­out phase of LNG fa­cil­i­ties - are no longer rel­e­vant,” he said.

Qatar­gas is the largest LNGpro­duc­ing com­pany in the world, with an an­nual out­put ca­pac­ity of 42 mil­lion tons a year, ac­cord­ing to its web­site. While QP owns a ma­jor­ity stake, global en­ergy firms in­clud­ing To­tal, Mit­sui & Co and Cono­coPhillips also pos­sess small stake­hold­ings. RasGas has a pro­duc­tion ca­pac­ity of about 37 mil­lion tons a year, ac­cord­ing to its web­site. It is a 70/30 per­cent joint ven­ture be­tween QP and Exxon Mo­bil.

—AP

DOHA: In this Saturday, April 4, 2009 file photo a gas pro­duc­tion facility is seen in at Ras Laf­fan, Qatar. Qatar is merg­ing its two govern­ment-backed liq­ue­fied nat­u­ral gas com­pa­nies, stream­lin­ing dis­tri­bu­tion of the fuel as the OPEC na­tion weath­ers a slump in en­ergy prices.

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