Qatar's North Field gas moratorium might never be lifted?

Petrochemical projects all over the Middle East depend on availability of ethane. In particular, any further developments long term at Ras Laffan in Qatar and at Borouge 3 in Abu Dhabi are dependent on further gas allocations.

So I read with interest a piece on the informative Global Arab Network which suggests the moratorium might never be lifted. France's Total is hoping to bid for the next cracker at Ras Laffan so this would be a blow.

Also, in Abu Dhabi, IPIC is investing in Borouge, a JV between IPIC and the Adnoc. This also requires further gas allocations. In May, German industrial gases group Linde signed a $1.07bn contract for a 1.5m tonne/year ethane cracker for the next stage of this development, Borouge 3. It will have total polyolefins capacity of 2m tonnes/year, with start-up expected in 2014.

Borouge 3 has not yet been allocated its ethane feedstock. "Borouge is competing with other projects wanting natural gas. There is a bit of a queue and different voices want to be heard. There's no question about the availability of the feedstock. It's a question of 'when', not 'if'," Khadem Al-Qubaisi, managing director of IPIC told me in a recent interview.

Here is a quote from the gas report: Qatar's gas bonanza is not all about LNG. The Dolphin group, led by Abu Dhabi's Megadeal in alliance with Total and Occidental, has a long-term contract to export 2 billion cubic feet per day (cf/d) of gas from the North Field to the UAE via a subsea pipeline. The gas will be distributed across the UAE, including to gas-hungry Dubai, as well as Oman.

In 2010, ExxonMobil also plans to produce first gas from the Al Khaleej 2 project, which will see around 1.5 billion cf/d of North Field gas processed for local distribution. Exxon also has a 10 per cent interest in the Barzan project, which is expected to produce 1.5 billion cf/d of gas, but has been delayed indefinitely by the Qatari authorities.

To complete the picture, by the end of 2012 Royal Dutch Shell is due to bring on-stream its Pearl gas-to-liquids project, which will absorb 1.3 billion cf/d of gas from the North Field.

However, it now appears that Qatar could have exhausted the reserves at the North Field. In 2005, a moratorium was imposed on future gas developments due to concerns that the North Field - which is part of the same structure that embraces Iran's giant South Pars reservoir - was being drained too quickly. The moratorium has remained in place, so there is a strong possibility that it will never be lifted.