Qatar Oil
View of heavy industry area in Umm Said, south of Doha
Courtesy Qatar Today
Khalifa ibn Hamad Al Thani, ruler of Qatar, inaugurates
Phase One of North Field natural gas development project, September
1991.
Courtesy Qatar Today
In 1935, after years of behind-the-scenes wrangling
involving
the shaykh, British and United States oil companies, the
British,
and the Saudis, an onshore concession was granted to the
AngloPersian Oil Company, which transferred the concession to
Petroleum Development (Qatar), an affiliate of the Iraq
Petroleum
Company (IPC). British, French, and United States oil
companies
held shares in IPC. Petroleum Development (Qatar) was
renamed the
Qatar Petroleum Company (QPC) in 1953.
As a result of adequate crude oil supplies at the time,
exploratory drilling in Qatar did not begin until 1938.
Oil was
discovered in Dukhan, on the west coast, in 1939. By 1940
about
4,000 barrels per day
(bpd--see Glossary)
were being produced.
World War II and its aftermath brought development to a
halt
between 1942 and 1947, and exports did not begin until
1949. The
Dukhan field extends south from Dukhan along the west
coast and
has three oil reservoirs layered progressively deeper
between
limestone formations and a natural gas field underlying
them all.
Dukhan crude has an American Petroleum Institute (API)
rating of
40 and a sulfur content of 1.2 percent. A pipeline
carries crude
from the Dukhan fields to storage, refining, and terminal
facilities on the east side of the peninsula at Umm Said.
In 1952 a Royal Dutch Shell subsidiary, Shell Company
of
Qatar (SCQ), obtained a concession for offshore
exploration on
the continental shelf. Most offshore discoveries centered
on the
island of Halul, about ninety kilometers east of Doha. The
major
offshore fields and the dates they were discovered are Idd
ash
Sharqi (1960) and Maydan Mahzam (1963). Offshore
production began
in 1964. Because Qatar and Abu Dhabi claimed the Al Bunduq
field,
the two parties agreed to exploit it jointly starting in
1969.
Another offshore field was discovered in the summer of
1991 by
Elf Aquitaine Qatar. Offshore crude had an API rating of
36 and
a sulfur content of 1.4 percent. Offshore crude is stored
at
facilities on the island of Halul, which also has pumping
stations and two single-buoy moorings for loading tankers.
Combined offshore and onshore reserves as of January 1990
were
4.5 billion barrels, offering thirty-two years of
production at
1989 levels.
Both concessions were for seventy-five years and gave
the oil
companies the right to explore, produce, refine,
transport, and
market all oil found in the stipulated area. In addition,
the
concessionaire companies were exempt from taxes and duties
on
imports and exports but were required to hire local labor
where
possible. The Anglo-Persian Oil Company (after a down
payment of
400,000 rupees in 1935) was required to pay Shaykh Abd
Allah ibn
Qasim 150,000 rupees annually thereafter
(see Money and Banking
, this ch.). (During World War II, when oil operations were
suspended, the annual payment was 300,000 rupees.) Before
commercial production could begin, an industry had to be
assembled. The company built a jetty at Bir Zikrit and
shipped in
water, foodstuffs, and almost 100,000 tons of equipment
and
supplies from Bahrain before the first drop of oil was
pumped.
Once exports began, oil became extremely profitable in
Qatar and
in the rest of the Persian Gulf as a result of favorable
concession terms, cheap labor, relatively inexpensive
drilling
and pumping costs, and easy access to transportation.
In 1952 the 1935 concession agreement was revised (in
line
with others in the region) to split profits fifty-fifty
between
the company and the ruler. Shaykh Ali ibn Abd Allah's
share rose
from about US$1 million in 1950 to US$61 million in 1958,
after
which his profits dipped to US$53 million in 1959 and did
not
rise to the 1958 level until 1963. Some money reached the
local
economy, but the initial impact of oil exports consisted
mainly
of high incomes for the Al Thani and high inflation on
basic
commodities.
From its initial concession in 1935, QPC kept aloof
from the
shaykh and was seen by the ruler and workers as
high-handed and
inept; for example, it triggered strikes by forgetting to
issue
workers' coffee rations or inadvertently forcing them to
work
during Muslim holidays. In the 1950s, the company had its
own
infrastructure (power, water, communications, and housing)
and
provided health care to workers and police protection to
its
facilities.
To gain some leverage over the oil company with regard
to
revenues, pricing, and production, Qatar joined the
Organization
of the Petroleum Exporting Countries (OPEC) in 1961, one
year
after it was formed. Qatar has stayed close to its OPEC
production quota when it has been in its economic interest
but
has often exceeded its quota to compensate for soft
markets or to
take advantage of the price increases that resulted from
the
Iraqi invasion of Kuwait in August 1990.
Between 1960 and 1970, annual oil production more than
doubled, from 60.4 million barrels (165,000 bpd) to 132.5
million
barrels (363,000 bpd). Production peaked in 1973 at 208.2
million
barrels (570,000 bpd). Between 1974 and 1980, production
leveled
off in the range of 410,000 bpd to 520,000 bpd. The early
1980s
saw a steady decline, apart from a small recovery in 1984,
with
an annual production of 151.5 million barrels (415,000
bpd).
After another flat period in the mid 1980s, production
levels
rose once again in the late 1980s and early 1990s, with
146.7
million barrels (402,000 bpd) produced in 1990 (see
table 20,
Appendix). The 395,000 bpd production levels of 1989 and
the
first eight months of 1990 exceeded OPEC quotas.
After independence in 1971, the Qatar National
Petroleum
Company was created in 1972 to handle oil operations. In
1973 the
government held 25 percent each of QPC and SCQ. Two years
later,
the Qatar General Petroleum Corporation (QGPC) was
established,
and the government signed new agreements with the oil
companies
giving QGPC 60 percent ownership. By 1977 onshore and
offshore
operations were fully nationalized, and service contracts
were
given to former concessionaires.
Production of petroleum products began in 1953 when a
QPCowned refinery started up with a capacity of 600 bpd. By
1975
refining capacity had expanded to 6,000 bpd, and by the
early
1980s another 4,000-bpd-capacity had been added. A
refinery
opened in 1983 and added 50,000 bpd in capacity, bringing
the
national total to more than 60,000 bpd. The National Oil
Distribution Company refined an average of 62,000 bpd in
1990; 75
percent of production was exported. As a result of the
jump in
prices caused by the Iraqi invasion of Kuwait, 1990
profits were
40 percent higher (US$1 billion) than in 1989. Most of the
refined products are consumed locally.
Data as of January 1993
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