Qatar pivots to LNG-hungry China in strategy shift

Qatar pivots to LNG-hungry China in strategy shift
Since the early 1990s, Qatar has depended on international companies, including ExxonMobil, Royal Dutch Shell and Total, to help it to build its LNG industry. (File/Shutterstock)
Short Url
Updated 12 May 2021

Qatar pivots to LNG-hungry China in strategy shift

Qatar pivots to LNG-hungry China in strategy shift
  • US shale gas revolution and increased focus on renewable energy as pressure mounts to tackle climate change has curbed the West’s appetite for gas

SINGAPORE/BEIJING: Qatar is in talks to make Chinese firms partners in its liquefied natural gas expansion project, the world’s largest, in a shift from the Gulf state’s reliance on western majors for technology and global outreach, industry sources said.
Since the early 1990s, Qatar has depended on international companies, including ExxonMobil, Royal Dutch Shell and Total, to help it to build its LNG industry. In exchange, the Western majors received lucrative long-term supply contracts.
But the US shale gas revolution and increased focus on renewable energy as pressure mounts to tackle climate change has curbed the West’s appetite for gas.
Three sources familiar with the matter told Reuters state energy giant Qatar Petroleum (QP) was in talks with Chinese state firms, including PetroChina and Sinopec , for equity stakes in Qatar’s $28.7 billion North Field expansion, the world’s biggest single LNG project.
Western majors ExxonMobil, Shell, ConocoPhillips, Total, Chevron and Eni have also been invited to bid for a share.
The sources spoke on condition of anonymity because the matter is private, although CNOOC Ltd’s CFO Xie Weizhi said last month the firm was “very interested” in Qatar’s gas projects.
It was unclear how advanced the talks were. One of the sources said PetroChina was discussing a 5 percent stake.
Biggest meets fastest
The North Field expansion should allow Qatar to strengthen its position as the largest LNG exporter, with output of 110 million tons per annum (mtpa) by 2026, a 40 percent increase.
The second largest exporter Australia has been closing the gap with Qatar through new gas projects in recent years.
Refinitiv Eikon shiptracking data showed Australia exported 77.3 million tons in 2020 compared with Qatar’s 77.6 million tons.
Although not carbon free, natural gas is less polluting than coal and China is expected to use it to replace coal in winter heating, electricity generation and industry to curb its emissions.
As a result, China is expected by next year to overtake Japan as the world’s biggest LNG importer.
China has already agreed supply deals and invested in producers such as Russia and Mozambique and is keen to diversify from Australian LNG following a deterioration in bilateral ties.
For its part, Qatar has courted China, whose gas demand accounted for about 8.3 percent of the world’s total in 2020 and is expected to grow by 8.6 percent in 2021 to 354.2 billion cubic meters, data from CNPC’s research institute showed.
Saad Al-Kaabi, Qatar’s energy minister and the head of QP, has met Zhang Jianhua, director of China’s National Energy Administration several times since 2018 to discuss cooperation.
Sinopec and Qatar signed two long-term deals, one last year and one earlier this year, following which Sinopec set up an office in Doha.
“China is the fastest growing market and is looking into long-term contracts to secure supply,” Carlos Torres Diaz from Rystad Energy consultancy said. “So moving deals to China would make a lot of sense for Qatar.”
Able to stand alone?
The western energy companies’ expertise and investment helped to make Qatar the world’s richest country on a per capita basis and to build up a sovereign wealth fund holding more than $350 billion in assets.
Now the joint LNG projects are established, Qatar is in a position to move forward without them.
One person involved in the talks said QP’s Kaabi told energy majors in meetings over the last months that it no longer depended on them to fund new projects.
Qatar was not necessarily dispensing with them, but would be seeking terms more favorable to it, the person said.
Last month, it decided not to extend its joint-venture contract for the Qatargas 1 LNG plant, with ExxonMobil, Total and Japan’s Marubeni and Mitsui after the 25-year contract expires in 2022.
Sources from Total and ExxonMobil told Reuters on condition of anonymity the companies had expected to negotiate an extension.
Mitsui and Marubeni both said they respected QP’s decisions and Mitsui also said it was interested in participating in the expansion.
Exxon spokesman Todd Spitler told Reuters the company looked forward to “continuing success” in future projects with QP and the state of Qatar.
“ExxonMobil affiliates are working with Qatar Petroleum to identify international joint venture opportunities that further enhance the portfolio of both,” he said.
Of the foreign partners, Exxon has the highest exposure to the country with access to 15.4 million tons per annum of Qatari gas, followed by Shell at 2.4 mtpa and Total at 2.3 mtpa. For Exxon, Qatar represents over 60 percent of its LNG sales volumes.
Western energy analysts say Qatar still has a use for the big, listed Western players, although it has less need for their direct investment.
Of the other companies with interest in Qatar, Chevron, and Total had no comment and PetroChina and Sinopec did not respond to requests for comment. QP also did not comment.
ConocoPhillips said it was preparing a competitive bid for the North Field expansion and an Eni spokesman also said it was considering a bid.
“International partners, especially the majors, remain key to helping Qatargas secure LNG off-take and global market access,” Valery Chow from Wood Mackenzie consultancy said. “QP doesn’t need foreign balance sheet funding for new projects.”
Having made a final investment decision on the expansion, Qatar is effectively building the North Field expansion project alone.
Kaabi has said Qatar has the muscle to continue without help, but would prefer to have partners to boost its global outreach and strengthen long-term deals.
It could also have political incentives to maintain ties as it considers a second phase of the expansion, which sources expect will be announced later this year and would increase its LNG capacity to 126 mtpa by 2027.
The value of Qatar’s US links was underscored as Washington helped it to resolve a row with Saudi Arabia, which ended early this year.
But the ties could be maintained with US companies taking a smaller share of Qatar’s LNG than in the past and through international connections.
The Western majors have over the last two years sold QP stakes in assets around the world, including exploration projects in Argentina, Brazil and Mozambique.
But they have not handed Qatar the kind of long-term deals in fast-growing Asian markets that the Chinese energy firms can deliver and Qatar regards as a priority, the sources said.


Saudi National Development Fund targets infrastructure projects

Saudi National Development Fund targets infrastructure projects
Updated 15 June 2021

Saudi National Development Fund targets infrastructure projects

Saudi National Development Fund targets infrastructure projects
  • The capital of the new fund could "reach several billion royals"

RIYADH: The Saudi National Development Fund is preparing to launch a new fund targeting infrastructure projects in the Kingdom.
The capital of the new fund could "reach several billion royals", Asharq Business reported, citing unidentified sources.
Muhammad bin Mazyad Al-Tuwaijri, deputy chairman of the National Development Fund said in February that the Kingdom had started to work  on the launch of an infrastructure fund.
Saudi Arabia launched an ambitious SR12 trillion ($3.2 trillion) program in March to boost the role of the private sector in diversifying the economy.
Under the 'Shareek program', private sector businesses will be helped to invest SR5 trillion between now and 2030, along with SR3 trillion from the country's sovereign wealth fund, the Public Investment Fund (PIF), and SR4 trillion as part of a new national investment strategy.

 


Omani Octal said to weigh $800m majority stake sale

Omani Octal said to weigh $800m majority stake sale
Updated 15 June 2021

Omani Octal said to weigh $800m majority stake sale

Omani Octal said to weigh $800m majority stake sale
  • A sale could value Octal at about $800 million

RIYADH: Octal, an Omani plastics packaging manufacturer, is considering a majority stake sale, Bloomberg reported citing people familiar with the matter.
A sale could value Octal at about $800 million, one of the people said. The company is working with JPMorgan Chase & Co., the people said, asking not to be identified for information confidentiality.  
The Muscat-based company has already attracted strategic suitors in Asia and the US, they said.
Octal was founded in 2006 and produces plastic used to package food and consumer products. The company is present in Oman, Saudi Arabia and the US and ships its products to more than 75 countries, according to its website.
The potential sale would add to the $96 billion of deals targeting companies in the Middle East and Africa this year, according to data compiled by Bloomberg.


Egypt clothing exports hit by surging shipping costs

Egypt clothing exports hit by surging shipping costs
Updated 15 June 2021

Egypt clothing exports hit by surging shipping costs

Egypt clothing exports hit by surging shipping costs
  • Rising container costs are affecting both their imports of raw material as well as their export of finished garments according to Mohamed Kassem

RIYADH: Egyptian clothing manufacturers are being hammered by surging shipping costs.

Rising container costs are affecting both their imports of raw material as well as their export of finished garments according to Mohamed Kassem, a member of the Egyptian Exporters Association.

Fabrics from China account for most of the country’s clothing exports, he told Al Arabiya.
The cost of shipping a 40-feet container from Shanghai to an Egyptian port has rocketed to as much as $14,000 compared to $2,500 before the pandemic, he said.
That has led to increased competitive pressures for Egyptian textiles exporters from rivals in Asia.
He called on the state to intervene to help support the industry.


Indian shares close at record highs as pandemic curbs ease, cases fall

Indian shares close at record highs as pandemic curbs ease, cases fall
Updated 56 min 58 sec ago

Indian shares close at record highs as pandemic curbs ease, cases fall

Indian shares close at record highs as pandemic curbs ease, cases fall
  • Many Indian states eased coronavirus restrictions on Monday, including the national capital New Delhi, where authorities allowed shops and malls to open as the number of new cases dropped to the lowest in more than two months

BENGALURU: Indian shares ended at record highs on Tuesday, as declining COVID-19 infections prompted many states to re-open businesses, with a rally in broader markets also helping the sentiment.
The blue-chip NSE Nifty 50 index rose 0.36 percent to 15,869.25 and the benchmark S&P BSE Sensex climbed 0.42 percent to 52,773.05 at close.
Many Indian states eased coronavirus restrictions on Monday, including the national capital New Delhi, where authorities allowed shops and malls to open as the number of new cases dropped to the lowest in more than two months.
India on Tuesday reported 60,471 new infections, the lowest since March 31.
The sentiment also tracked global stocks that hit a record high, as investors bet likely “transitory” inflation pressures will restrain the US Federal Reserve from signalling a shift in policy settings.
Many investors expect the Fed to maintain its dovish stance at its two-day meeting starting on Tuesday. Some board members, however, have said the central bank should start discussing tapering its bond buying.
In Mumbai trading, financial stocks provided a boost to the Nifty 50, with ICICI Bank and HDFC Bank ending 1.6 percent and 0.7 percent higher, respectively.
The Nifty Bank Index and the Nifty Private Bank Index, which have so far gained more than 0.55 percent this week, were among the top performers across sub-indexes rising between 0.85 percent and 1.07 percent.
Software services firm Infosys rose 0.8 percent, lifting the Nifty IT index by 0.23 percent.
Shares of Future Retail closed 10 percent higher, after staying at those levels since early trade.


Abu Dhabi’s Eagle Hills ready to open biggest water park in Jordan

Abu Dhabi’s Eagle Hills ready to open biggest water park in Jordan
Updated 15 June 2021

Abu Dhabi’s Eagle Hills ready to open biggest water park in Jordan

Abu Dhabi’s Eagle Hills ready to open biggest water park in Jordan
  • It will open on July 3
  • The park was developed by Abu Dhabi-headquartered Eagle Hills, one of the largest developers in Jordan

DUBAI: The Saraya Aqaba Waterpark – billed as the biggest in Jordan – is opening its doors on July 3.
Located in the country’s only coastal city, Aqaba, the park spans an area of more than 28,500 square meters. It has rides, slides, as well as food and beverage stalls.
“At Saraya Aqaba Waterpark, guests from all around the world are in for an aquatic adventure like no other with slides, rides and experiences suitable for guests of all ages,” Chris Van Der Merwe, its general manager said in a statement.
The park was developed by Abu Dhabi-headquartered Eagle Hills, one of the largest developers in Jordan, and is operated by Abu Dhabi-based Farah Experience, which also handles Ferrari World Abu Dhabi.
Theme parks and other physical attractions have taken a hit when the pandemic forced countries to restrict people’s mobility, however some are now welcoming guests again as attractions make a gradual return.