Energy giants court Qatar for gas expansion role despite crisis
Three of the West’s biggest energy corporations are lobbying Qatar to take part in a huge expansion of its gas production, handing Doha an unintended but timely boost in its bitter dispute with Gulf Arab neighbours.
The chief executives of ExxonMobil, Royal Dutch Shell and France’s Total all met the emir, Sheikh Tamim bin Hamad al-Thani, in Qatar before it announced a plan on Tuesday to raise output of liquefied natural gas (LNG) by 30 per cent.
Company and industry sources told Reuters that the CEOs had expressed interest in helping Qatar with its ambition to produce 100 million tonnes of LNG annually – equivalent to a third of current global supplies – in the next five to seven years.
The companies already have large investments in countries on both sides of the dispute, and are keen to remain neutral after Saudi Arabia, the United Arab Emirates, Bahrain and Egypt severed ties with Doha on June 5.
Spokespeople from all three firms declined comment. However, a top executive from one energy major looking into expanding in Qatar said the huge business opportunity was worth the considerable political risk.
“There is only one policy here - you have to behave like a commercial corporation,” the executive told Reuters. “You have to make your choices purely economically and be Qatari in Qatar, Emirati in the Emirates.”
Energy sales have powered Qatar’s rapid rise as a regional player since the late 1990s, and the oil majors’ interest in the LNG expansion underline its longer-term economic muscle during the political row with its neighbours.
Chief executives Darren Woods of Exxon and Ben van Beurden of Shell both met the emir after the four Arab countries imposed the sanctions.
Total chief Patrick Pouyanne has also visited Doha in recent weeks.
Qatar, the world’s largest LNG supplier and second biggest gas exporter after Russia, has some of the lowest production costs.
The plan was seen as an opening shot in a price war as Doha tries to defend its market share, especially against supplies from US shale deposits where costs are higher.
The four Arab countries, which have demanded Qatar stop fostering terrorism and courting Iran, said after meeting on Wednesday that Doha’s response to their grievances had been negative.
Saudi Foreign Minister Adel al-Jubeir said the political and economic boycott would remain until Qatar improved its policies. Further steps would be taken at the appropriate time, he said.
Doha denies aiding terrorism and its foreign minister, Sheikh Mohammed bin Abdulrahman al- Thani, accused the four of ‘clear aggression’ while adding that Qatar continued to call for dialogue to settle the dispute.
Exxon, Shell and Total have already invested extensively in Qatar, particularly in projects to liquefy gas, allowing it to be shipped by tanker to consumer markets where transport by pipeline is not feasible.
Woods met the emir on June 26, discussing ‘cooperation’ with Qatar, where Exxon has been present since 1935, according to a statement carried by the state news agency.
Industry sources close to the talks said that “the Exxon CEO was very keen to join the new gas capacity expansion and expressed willingness to invest”.
Woods replaced Rex Tillerson, under whom Exxon helped to build Qatar’s LNG industry until he left to become US Secretary of State earlier this year.