News Desk |
In a breakthrough agreement signed between Qatar Petroleum (QP) and Total for a share of exploration and production rights, QP has acquired two blocks of resource-rich offshore Guyana in Latin America.
The agreement signed on Monday is subject to customary regulatory approvals by the Government of Guyana, to which QP will hold 40% of Total’s existing 25% participating interest in the Orinduik block. Other partners include Tullow Oil (Operator) with a 60% participating interest and EcoAtlantic with a 15% interest.
Guyana – A Petroleum Exploration Paradise
Guyana, officially the Co-operative Republic of Guyana, is a country on the northern mainland of South America. It is the only English speaking country in South America and is historically and culturally part of the Anglophone-Caribbean.
Guyana has a long history of petroleum exploration. Its offshore Guyana Basin and the inland Takatu Basin have attracted companies such as Shell, Total and Mobil since the 1940s, companies which have completed much of geological survey of the area and drilled a number of wells.
The economic and political blockade imposed on the tiny peninsula by Saudi-Emirati axis, Qatar has shifted its focus from regional GCC engagements to independent foreign and economic policy.
Petroleum production in Guyana is affecting a major boost to the economy of Guyana. In 2008, there were four companies undertaking exploration work in Guyana. ExxonMobil, Repsol, Century Guyana Ltd. and CGX. The Petroleum Division of the Guyana Geology and Mines Commission has the responsibility of monitoring exploration in Guyana.
Guyana gained attention in the world on May 2015 when ExxonMobil announced the discovery of more than 90 meters of high-quality, oil-bearing sandstone reservoirs about 200 km off its coastline. The Liza-1 well was drilled to 5,433 meters in 1,742 meters of water, and was the first well on the Stabroek Block, which is 26,800 square kilometers in size.
Qatar Petroleum acquires 40% of the share of Total in two blocks offshore Guyana.#QP #QatarPetroleum #Qatar https://t.co/488qgZQQ4B pic.twitter.com/Pwfr4krqWy
— QatarEnergy (@qatarenergy) July 29, 2019
The well may start producing by the end of the decade, could potentially produce 700 million barrels of oil equivalent — that would make it worth $40 billion at today’s international crude price. The discovery could be significant for Guyana, which currently does not produce any oil and could use the economic boost.
The oil and gas exploration activity by Guyana has been a source of tension with neighboring Venezuela. In May 2015, Guyana announced the significant discovery, which set off a round of recriminations between Venezuela and its eastern neighbor. Officials in Caracas, which has long had claims on Guyana’s Essequibo region, have alleged that the concession is located in disputed waters.
Read more: ExxonMobil finds largest Cyprus gas reserve yet
Guyana, which does not currently produce any crude, is on the cusp of an oil boom expected to transform its tiny economy. Exxon Mobil Corp has made 13 offshore discoveries with an estimated 5.5 billion barrels of discovered recoverable resource.
Qatar’s Economic Strategy
Qatar’s ambitions under its National Development Strategy (2018-2022) has been primarily focused on establishing a diverse economy based on tourism under Qatar’s National Tourism Council (QNTC), natural resources (particularly natural gas) under the ambit of Qatar Petroleum, investment assets under Qatar Investment Authority (QIA), and other such diverse endeavors.
Since the economic and political blockade imposed on the tiny peninsula by Saudi-Emirati axis, Qatar has shifted its focus from regional GCC engagements to independent foreign and economic policy. To pursue its goals pertinent to its vast natural resources, Qatar withdrew from the Organization of Petroleum Exporting Countries (OPEC) earlier this year in January to register its motivation to go on a solo-drive to explore and produce Natural Gas in its massive North Field.
Qatar shares the largest gas field of the world with its ally Iran in the Persian Gulf and plans to increase expansion on the North Field. At present Qatar has the capacity to produce 77 million tons of Liquefied Natural Gas (LNG) per year. However, it plans on to boost the LNG production to 110 million tons a year by 2024.
The relationship is a classic example of what is known as “economic interdependence” through which both countries share an equal amount of benefit from each other.
The expansion plan of the North Field, the geographical extension of Iran’s South Pars gas-field, is currently underway with additional plans to bid the construction of onshore facilities for the production of various petrochemicals.
Moreover, Qatar owns 14 percent of known natural gas reservoirs and is presently the world’s third-largest LNG exporter. At present, Qatar exports LNG to states in Europe, Asia Pacific, North America, South Asia and the Far East.
Qatar Enters Petroleum Investments
The current Guyana investment of QP is only the beginning of Qatar’s investment plans in the near future. With plans to begin construction of Middle East’s top Ethylene plant, Qatar has also reportedly entered the next phase of petrochemical investment. It is reported that the country will own 70 per cent of shares in the projects that will include the production of various petrochemicals and plastic goods.
QP is reportedly venturing into the production of high density polythene which will subsequently increase the country’s production to 4,300 tons per year once the plant is constructed by 2025.
Read more: Qatar to collaborate with Chevron Phillips to build Region’s top Ethylene plant
Moreover, the extraction companies are expected to gain more profit as the demand for crude oil and natural gas will increase as a subsequent result of the country’s production venture. In June QP had announced joining hands with Chevron Phillips Chemical Co. to venture into the construction of an ethylene plant.
Last year QP reported to have been planning to invest at least $20 billion in the United States which it finalized earlier this month when the Emir Sheikh Tamim bin Hamad Al Thani visited Washington to meet President J. Trump. It has also opened bid to venture with technical companies for the construction of four LNG trains that will be expected to carry 8.8 million tonnes of LNG per year once completed.
In addition to that, Qatar Petroleum (QP) tendered notices to invite construction contractors for the construction of sixty LNG carriers for its exports to the US. The CEO of QP, Saad al Kaabi, has reportedly stated that the number of LNG carriers will be further increased to 100 carriers in the coming years.
https://twitter.com/You__News_/status/1155760917763805185
Other than that petrochemical and LNG agreements, Qatar Airways, the national carrier of the Gulf state had reportedly finalize the purchase of five Boeing 777 freighters and a large-cabin aircraft from Gulfstream Aerospace. It also plans to power its Boeing aircraft with General Electric Co jet engines- all US-based companies.
In the past, the US has signed multiple comprehensive military partnership deals with the tiny Gulf state, which relies heavily on it for military purchases.
Moreover, the White House has also reported several military agreements between the two states. The Qatari Defense Ministry is expected to buy a Raytheon missile defense system imperative for Qatar’s hostile neighborhood.
Qatar and the US share a cooperation-based relationship primarily in the strategic and economic realm. The relationship is a classic example of what is known as “economic interdependence” through which both countries share an equal amount of benefit from each other. Qatar continues to be blockaded by US allies in the Gulf since 2017, including Saudi Arabia, Egypt, UAE and Bahrain over alleged support to terrorism.
Initially, the Trump Administration seemed divided on the blockade as demonstrated by President Trump’s tweet-applause for the blockading quartet following their sudden boycott. However, recent developments show Qatar’s strategic significance for the US as both countries continue to cooperate amid the blockading crisis.
In the past, the US has signed multiple comprehensive military partnership deals with the tiny Gulf state, which relies heavily on it for military purchases. On the other hand, it relies greatly on Qatar for its strategic presence in the Persian Gulf.
Read more: Qatar’s friendly suit: Promises to provide the UAE with its share of LNG
Qatar’s geo-strategic position makes it a lucrative partner for the US in the Gulf region; located in the east of Arabia, it shares the larger part of its border with the Persian Gulf and a small portion of its land tucked with Saudi Arabia, the only country it shares its land border with, forming a peninsula that expands 11,437 km sq towards the North in the Persian Gulf, with Iran on the opposite side of the Gulf. It is in fact at the epicenter of the Arabian and Persian Gulf and their politics at large.