Petroleum International (QPI) – Nasser Khalil Al-Jaidah, CEO
The CEO of QPI discusses the company’s new focus on adding to Qatar’s LNG supply capacity through international projects, and how the company is pivoting internally in order to address this change.
Since 2005, Qatar Petroleum International (QPI) has been building an admirable portfolio of projects across the value chain and across the globe. What is your assessment of the best global locations for upstreamprojects today, and how is this reflected in QPI’s current portfolio?
QPI’s upstream focus has been on producing properties with development and exploration upside, in our target markets of Africa, Asia-Pacific, and the Americas. The Americas have always been a strong and attractive market. However, in Africa, apart from the established hydrocarbon provinces in the north and west, the continent has remained largely under-explored. QPI remains active in studying and analyzing various opportunities in a relatively unexplored continent, with the objective of maximizing our share across various energy value chains. Several new prolific hydrocarbon provinces have emerged in the last decade in the Central and East African rift basins (Sudan, Chad, Kenya, and Tanzania), as well as the intra-cratonic basins, such as Taudoni, Murdi, and others. These emerging hydrocarbon provinces have attracted small independent exploration companies and other major IOCs and NOCs.
QPI’s current upstream portfolio consists of a 23 percent interest in the Parque das Conchas (BC-10) project offshore Brazil, conventional natural gas and crude oil assets, including existing infrastructure, in the Western Canadian Sedimentary basin in Alberta, northeast British Columbia and southern Saskatchewan (QPI 40 percent, Centrica 60 percent). In Mauritania, QPI has a 20 percent working interest as an active non-operating partner in two exploration blocks, with Total E&P Mauritania (60 percent) as operator and Sonatrach (20 percent) as another partner. Seismic and other necessary studies have been completed. Two exploration wells have been drilled. QPI also has a share subscription to 15 percent of Total E&P Congo (TEPC) relating to nine producing assets and three exploration licenses in the country.
Given the current economic slowdown that Brazil is experiencing, why was 2014 the right time for QPI to invest there?
Brazil is one of the largest emerging economies, even though it is going through an economic slowdown, it is picking up in the latest period, as many countries around the world during this time of economic recovery. BC-10 is a prime example of the continued strengthening of our long-term relationship with our partners. We are pleased to be expanding our growing portfolio with Shell through this most recent investment. Our investment will support the continued development of the project. QP has a long-term experience in project execution, as demonstrated by RasLaffan, and this is the knowledge and expertise that we bring to the project.
What do you see as the role of QPI in the broader sphere of Qatar’s oil and gas sector?
I see QPI as an enabler for the vision of both Qatar Petroleum (QP) and Qatar as a country. International growth is the only possible future for the Qatari oil and gas industry, having almost reached the potential of the activity that has taken place over the last two decades. In this time, Qatar has worked hard to consolidate domestically, but now expansion is inevitable, as the company has grown to become one of the world’s largest LNG suppliers. In order to reach its potential, QP must seek new markets, make new partnerships, review the full value chain and plug the gaps wherever they appear.
In this context, and because Qatar has is focused on diversification as a result of the Qatar National Vision 2030, we must look beyond our domestic resources. There is a moratorium on exploration projects at North field, but there is no moratorium for us beyond Qatar’s borders, and the country must look there in order to maintain its market share in the years to come. Qatar today controls almost a third of the world LNG market, with a production capacity of 77 million tonnes of LNG per annum. This will diminish to around 20 percent if we do nothing. One approach is looking into gas resources in other markets and continents, and this is where QPI can play a role, through its current work to boost international reserves. We need to prove to our LNG customers that in the future, we will be able to supply them from different destinations, and continue to grow as a global force in the LNG market.
Does that mean that in the years to come, we will see QPI shift from just being an investment partner in international projects to becoming an international operator?
That is certainly our hope – to be an operator in the future. But one always has to start from somewhere; additionally, we have a legacy of success that we do not want to tarnish by taking enormous risks. There is huge political will for the Qatari oil and gas sector to move forward and internationalize, and this activity has been spearheaded by QPI. Our ultimate ambition is to become the number one NOC in overseas investment.
Where will the expertise come from to make that move to operator? Will it come internally from Qatar or as a result of the partnerships you have?
It will be a hybrid. Qatar is a very young nation, and developing experience and expertise takes time, so for the moment our growth will have to be like that of QP itself – through an organization of that includes Qatari staff, expats, and partnerships with other companies. One of the strengths and successes of both QP and QPI is the way that the companies leverage their relationships.
QPI enters into new ventures only with select, financially strong partners. Current partners include Centrica, ExxonMobil, Petro China, Shell and Total, amongst others. These partnerships are important to QPI’s operations and play a valuable role for the Qatari oil and gas sector in opening up new markets and providing technological and expertise transfer of knowledge. These strategic partners will be with us for many years to come.
The one partner QPI has that has no current interest in the Qatari market is Centrica, but because of the relationship between Qatar and the UK, and the fact that Centrica is a buyer of Qatari LNG, our relationship has moved quickly despite this, and it seems today that deals with Centrica move much faster than other deals we are working on. We can take advantage of this, even if it doesn’t feed back to Qatar in the same way.
Will we see QPI expand in other areas in the years to come, or is now a time for consolidation?
One of our biggest challenges today is making the case that we have reached a point where we have diversified enough, and must now refocus our aims. If we start planting too many trees, we will eventually find ourselves lost in the woods that we have planted. Our biggest priority is undoubtedly LNG, and there are a lot of opportunities, from North America to Africa, and we are well positioned to capitalize on these opportunities, given our existing infrastructure and logistics services. The LNG experience that we have built in Qatar is invaluable – even today, no one has matched Qatar in terms of the capacity and technology that we have built here, and this is something that must be leveraged.
What this means for QPI is that we must be more focused on these opportunities. While investing in an oil projects that add one or two million barrels per day to your portfolio is a good financial investment, it does not make a difference on a global scale. Investing in LNG, however, would give us the potential to raise our production from 77 million tons to 90 or 100 million, and in global supply of LNG, those 30 million tons make a significant difference, especially considering that current global supply only stands at between 220 to 240 million tons. This figure is expected to grow to between 400 and 420 million tons in the coming years (excluding possible production from the US), as projects in Australasia and Africa come online.
Investing in projects today will be very different from our first projects in terms of the capital outlay, particularly if we invest in projects in other countries. What Qatar did in 2004 and 2005 was visionary: we took the risk to leverage supply ahead of demand, and to book all the EPC contracts needed for the development without tendering. If we had waited even another six or seven months, it would have made a difference, and today, as a result of that choice,Qatari LNG is the most competitively priced in the world. We will not be able to replicate this in other projects.
What will we see from QPI in terms of its growth and development in the coming years as it adjusts to this new mandate?
The majority of Qatar’s investment in the oil and gas sector in the coming years will be channeled through QPI: the Economic Supreme Council have very high expectations for our company. We are small in terms of personnel, but we are growing slowly, because we have to grow in relation to our activities. We don’t want to build staff prematurely. QP has the potential to be either a fat duck lying next to a lake, enjoying life, or a flying eagle, and we want to aim for the latter.
What message does QPI need to send to its partners and potential partners today?
We have to tell the rest of the world that relies heavily on Qatari LNG that we are reliable, trustworthy, and credible when it comes to supply.
To potential partners, we hope to bring the Qatari way of doing business to other countries as we embark on more international projects: transparency, equitability, good business practices. We have learned a lot from our international partners, and have turned Qatar into a success story. Many other countries with equally high potential can today only dream of achieving what Qatar has with its oil and gas industry.
To read more articles and interviews from Qatar, and to download the latest free report on the country, click here.