Qatar’s LNG Dominance Threatened by Shell’s Reported Withdrawal

Royal Dutch Shell’s widely reported decision to end its role in a gas project in Qatar threatens the Gulf state’s dominance in the production of liquid natural gas (LNG).

Jul 22, 2014 at 10:06AM

This article was written by Oilprice.com -- the leading provider of energy news in the world. Also check out this recent article:

Royal Dutch Shell's (NYSE:RDS-A) widely reported decision to end its role in a gas project in Qatar threatens the Gulf state's dominance in the production of liquid natural gas (LNG).

In 2010, the British energy giant had signed a contract with the state-owned Chinese company PetroChina and with Qatar Petroleum (QP) to drill two wells as part of a five-year project to explore for gas in the North Field, part of the Pre-Khuff formation off the coast of Qatar.

Shell owns a 75 percent share of the initiative and PetroChina holds the remaining 25 percent.

In 2013, however, one Shell well in Block D of the field came up dry, although Qatar had promoted it as a rich source of energy. As a result, Shell decided against even beginning a second exploratory well, anonymous sources told The Wall Street Journal.

Similar, independent reports were carried by ArabianBusiness.com and the Gulf Daily News.
One Qatari official told The Journal, "Shell made it clear that the second well is not going to be commercially viable and they want to get out of the acreage by next year, if not earlier."

A person identified by The Journal only as a Shell spokesman said the first well had reached the depth planned to explore for gas, but "it did not encounter commercial volumes of hydrocarbons." Now, he said, Shell is negotiating with QP and PetroChina on how to withdraw from the venture without drilling the second well.

The reported withdrawal is bad news for Qatar, which is now the world's largest producer of LNG, a status that's given it the world's greatest wealth per capita. The news is equally bad for QP, which was to have shipped the LNG to customers around the globe.

Shell and PetroChina aren't the only foreign energy companies that are contractually obliged to explore for gas in the Pre-Khuff formation. Others include GDF Suez of France, JX Nippon of Japan and a second Chinese company, CNOOC.

The chief of consulting at Manaar Energy in Dubai, Robin Mills, told The Wall Street Journal that these companies also had had disappointing results in their exploratory drilling, and a second Qatari official told the newspaper that his country fears Shell's withdrawal could prompt them to reconsider their commitments.

Mills said Qatar might have to scramble to find new LNG projects. Otherwise, he said, "while Australia, North America, East Africa are expanding in LNG, [Qatar's] share of the market will fall."

These poor results aren't good news for Shell, either. The company has so far done well in Qatar, and invested $20 billion to build a huge LNG export plant and a modern facility, named Pearl, to convert gas to LNG.

As a result, it's unlikely that Shell is pulling out of Qatar altogether, an anonymous official told ArabianBusiness.com. This source said it would keep working on other projects in the country.

OPEC is absolutely terrified of this game-changer
Imagine a company that rents a very specific and valuable piece of machinery for $41,000 per hour (That's almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report reveals the company we're calling OPEC's Worst Nightmare. Just click HERE to uncover the name of this industry-leading stock... and join Buffett in his quest for a veritable landslide of profits!

 

Written by Andy Tully at Oilprice.com.

The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers