Qatar and Exxon Mobil plan US$10 billion gas investment in Texas


HOUSTON — Qatar Petroleum and Exxon Mobil said on Tuesday that they are making a big investment in American natural gas exports nearly two years after Saudi Arabia and its allies launched a trade embargo against Qatar.

The companies said they would spend more than US$10 billion to turn Golden Pass, a terminal in Texas originally built to import gas, into an export hub for gas extracted from shale fields in Texas, New Mexico and elsewhere.

Already the biggest liquefied natural gas exporter in the world, state-owned Qatar Petroleum’s push into the United States would give it quicker and cheaper access to Latin America, freeing more of its domestic production for lucrative Asian markets.

Qatar is also making a bid to strengthen its relationship with the Trump administration, which has established close ties with Saudi Arabia.

“For Qatar, this serves as a counterbalance to the Saudi-U.S. relationship,” said Leslie Palti-Guzman, president of GasVista, a New York-based consulting firm. “Saudi Arabia and Qatar right now are looking to invest in the U.S. liquefied natural gas play, and both think it’s going to curry favour with the Trump administration.”

The administration has attempted periodically to mediate Qatar’s dispute with Saudi Arabia, Bahrain, United Arab Emirates and Egypt since the Saudi-led bloc cut economic and diplomatic ties with Qatar in 2017. But its policy has not always been clear.

Qatar has long leveraged its gas wealth to exert political influence around the Middle East and North Africa, with television broadcasting, financial support for Hamas in the Gaza Strip and alliances with Muslim Brotherhood chapters and militia groups around the region. The country also hosts a major U.S. military base.

Qatar Petroleum has been a big investor in Golden Pass for years. Originally the giant terminal in Sabine Pass, Tex. was designed to import gas, and cost US$2 billion to build about a decade ago. But the frenzy of natural gas drilling in shale fields created a domestic glut, and the facility has been dormant for the past eight years.

Exxon Mobil and Qatar Petroleum will reverse some pipelines and add several enormous refrigerant plants to Golden Pass. The plants will cool gas to minus-260 degrees Fahrenheit and condense it into a liquid to be loaded onto tankers and shipped to Latin America, Asia and Europe.

Golden Pass will provide an increased, reliable, long-term supply of liquefied natural gas to global gas markets, stimulate local growth and create thousands of jobs

Exxon Mobil chief executive Darren Woods

“Golden Pass will provide an increased, reliable, long-term supply of liquefied natural gas to global gas markets, stimulate local growth and create thousands of jobs,” Exxon Mobil chief executive Darren Woods said in a statement.

Qatar Petroleum will own 70 per cent of the project, with Exxon Mobil as its junior partner. The two companies have a long relationship that includes projects in Argentina, Brazil and Mozambique.

Golden Pass is expected to create about 9,000 jobs during five years of construction and 200 permanent positions. The announcement had been delayed for years by regulatory hurdles. In 2017, the Energy Department approved exports from Golden Pass.

Qatar Petroleum’s footprint is expanding at home and worldwide. In Qatar, it is working with international companies to increase LNG production capacity by more than 40 per cent.

It is also expanding in Morocco, Cyprus, Mexico, Brazil, Argentina, South Africa and Mozambique, and has expressed interest in making billions of dollars of additional investments in United States oil and gas production.

“The politics and the economics are aligned,” said Nikos Tsafos, an energy expert at the Center for Strategic and International Studies.

A Qatari liquid natural gas tanker ship being loaded up with LNG at Raslaffans Sea Port, northern Qatar, just as the tiny, energy-rich Arab nation announced it would withdraw from OPEC. Associated Press file photo

Much of the money is coming from investments Qatar removed from countries around the Middle East in retaliation for the blockade.

In the past few years Qatar’s dominance in long-distance shipping of natural gas has been challenged by Australia, and more recently by the United States. Last year, the United States became the fastest-growing exporter of liquefied natural gas as the global gas trade increased by 10 per cent, primarily because of growing demand in China, Japan and South Korea.

The Energy Department projects that American LNG export capacity will increase from 3.6 billion cubic feet a day, to 8.9 billion cubic feet a day by the end of the year, as companies finish several facilities across the Gulf Coast.

Natural gas is the fossil fuel with the fastest-growing demand worldwide. The number of countries importing LNG has more than doubled to more than 40 in the past decade.

Asian countries are using gas to replace coal and oil in their power sectors. Thailand and the Philippines are considering LNG imports as a replacement for declining domestic gas production. Many European countries are seeking LNG imports to reduce their dependence on Russia and because gas production on the continent is in decline.

“We see the number of buyers increasing very fast,” said Jean-Baptiste Dubreuil, a senior gas analyst at the International Energy Agency in Paris. “In most cases, gas is replacing more carbon-intensive fuels, so it’s a positive.”

For Exxon Mobil, the investment marks significantly increased interest in the LNG trade that should fit neatly with its growing investment in oil and gas production in shale fields, particularly in Texas and New Mexico.

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