by Roudi Baroudi
Qatar’s growing stature on the international stage did not come about by accident, but rather as the product of a concerted effort to acquire a larger and more constructive role in the region and around the world. This greater capacity to exert positive influences has been made possible by the country’s enormous gas reserves, but even these would not have sufficed without both effective management of those resources and many years of astute diplomacy.
There were never any guarantees that the story would have a happy ending. The first oil well, “Dukhan l,” was drilled in 1939, but Qatar did not gain full independence from Britain until 1971, and its flagship oil company, Qatar Petroleum (QP), was not formed until 1974. Like many resource-rich countries emerging from the era of colonialism, Qatar lacked many of the institutions and mechanisms required for effective governance, so for many years it did not derive maximum benefit from the production and export of crude.
Near the end of the 20th centm;y, however, the country and its territorial waters were found to be sitting atop huge deposits of natural gas in what would become known as the North Field. The colossal North Field covers an area of some 6,000 square kilometres, making it the single largest non-associated gas reservoir on the planet. Coupled with a new leadership that had the vision to make far-seeing investments, this gas has offered Qatar an opportunity to more than make up for lost time. As of 2014, the country’s gas reserves were estimated at more than 25 trillion cubic metres, surpassed only by Russia and Iran and equivalent to a whopping 14 percent of the world total.
It was foresight, though, not just raw reserves, that made Qatar what it is today Not content with the country being “just” another major producer of fossil fuels, the ruling family threw its weight behind financial investments and technological choices that would make Qatar a global leader in several facets of the gas business. Accordingly, billions of dollars were spent to expand production, acquire the world’s most advanced liquefied natural gas (LNG) trains, and build a fleet of ultra-modern LNG carriers to serve customers around the globe. As a result, Qatar now leads all nations in exports of LNG. In addition, the country has been the foremost partner in the pioneering of research, development and commercialisation of gas-toliquids (GTL) technologies, including a jet-fuel blend that reduces both emissions and operating costs.
Even more than natural resources, then, it is sound judgement that has transformed Qatar into the worlds wealthiest nation-state on a per capita basis, winning it a choice seat at the table when major power discuss the most pressing matter of the day It has used this influence to promote both economic and political stability, striving to forge bilateral and multilateral relationships with which to address shared concerns like war/occupation, poverty, and the environment.
This level of economic and diplomatic ambition requires across-the-board engagement and, when appropriate, strong leadership. Therefore, in addition to having Joined the Organisation of Petroleum Exporting Countries just a year after OPEC’s founding in 1960, Qatar also plays a central role in the Gas Exporting Countries Forum (GECF) set up in 2001, having hosted the GECF’s Executive Office and Secretariat since 2009.
GTL capital of the world
The GECF was established to promote the interests of the world’s leading gas producers by holding regular meetings to find common ground and develop solutions for shared challenges, but its selection of Doha to serve as headquarters re!lected a different priority, that of improving ties and coordination with consumer nations. As a country that maintains warm relations with governments on both sides of several diplomatic divides, Qatar and its robust finances have been instrumental in initiating and sustaining useful discussions of issues affecting the international gas market, providing a platform of stability that has allowed the development of a healthy and prosperous energy market that benefits all stakeholders.
Despite the volatility of the hydrocarbon markets and their relationship to international politics, Doha, in particular with its energy policy, has been a focal point of cooperation among producers and consumers with a view toward adopting new standards, regularizing markets and prices, and ensuring both stability and sustainability of supply so that demand is met in a mutually beneficial manner. The resulting safe and sustainable energy !lows, with fewer interruptions due to wars or other forms of instability, yields a variety of certainties that serve the interests of all countries. So it was that in less than a decade, a tiny country of just 2 million inhabitants became the most important force for maintaining global security and price stability for all forms of natural gas. Given the ever-increasing importance of natural gas in the global energy mix, this also means that Qatar contributes mightily to economic growth and !lourishing energy initiatives in virtually all comers of the world.
In addition, Qatar has employed skilful political leadership in urging its fellow gas producers to think long and hard about the difference between oil and gas prices. Oil remains the benchmark, as all other energy prices usually rise and fall under its influence. Qatar continues to study the causes that have led to gaps in the price relationship between oil and gas, and how collective action can both restore the link and achieve parity between the two. Given the many environmental and other advantages that gas offers over traditional energy sources – including being non-toxic, near-perfect combustion, no soil contamination, and an enviable safety record – greater parity would seem to be in the interests of all concerned, including the planet itself.
The GTL venture is a prime example of innovation designed to ensure that more and more applications can use cheaper, cleaner-burning natural gas. Qatar is carving out yet another niche for itself, this time as “GTL capital of the world.” Only two other countries – South Africa and Malaysia – possess similar facilities, and Qatar’s access to affordable feedstock will give it significant advantages for years to come. By 2016, national production of GTL will amount to 174,000 barrels a day, radically increasing supplies available to help airlines, local public transport and utilities to reduce their carbon footprints.
The natural gas industry is growing and globalizing as demand expands and new technologies like GTL enable and inspire creative new ways to customize compatible products and services. Simultaneously, Qatar’s backing of a positive global energy dialogue,
reliable production and massive investment in todays fuel of choice are bringing more stability and security of supply to regional and global markets because in the gas industry, volumes and prices are defined primarily by long-term contracts, consumers and supplies. In 2006, Qatar and two of its neighbors, Oman and the UAE, completed the first cross-border regional gas pipeline, linking the North Field to customers in Abu Dhabi, Dubai and Oman. This tri-nation sub-sea gas pipeline project was an unprecedented achievement and so set a fitting example of strategic inter-energy connecting grids.
The impacts go far beyond the energy business. For example, Qatar has worked very sucessfully to foster better environments for strategic partnerships, and to achieve greater energy security while improving climate protection in the discovery, development and production of cleaner and more efficient fuels. This combination imparts enormous value to society by inspiring confidence in the strength and durability of the national economy and the policies pursued by the government, both at home and abroad. Better fuels mean higher standards of living, greater social stability, and a cleaner environment. The revenues and cost savings can be a game-changer in reducing poverty, and the Qatari government has worked to ensure that thegas industry operates with due regard for social, moral and environmental impacts. On this last score, achieving a truly open global market for gas is perhaps the single greatest step government and industry can take to achieve genuinely significant levels of de-carbonization in the coming years.
Even as I write, the world is rapidly moving toward commercialization of energy technologies independent of carbon, such as photovoltaics and fuel cells. These will take time to mature, particularly in terms of applications requiring large mobile energy supplies, so gas will be the natural bridge that joins the carbon and post-carbon eras.
For now, the oil and gas industry continues to decide the future of our world economy, and energy and capital complement one other. Therefore, the emerging primacy of gas will only solidify Qatar’s position as a global energy titan, and continue to fuel its diversification as an emerging business and logistics hub in today’s highly competitive world. And if recent history is any guide, the same resources will help fund investments that make the country a player in tomorrow’s world as well.