Wintershall, Germany's biggest oil and gas producer, said it was pulling out from exploring for gas in Qatar after it was not given access to local infrastructure that would allow it to profitably develop its field there.
Wintershall, which spelled out a major plan last year to expand in the Middle East, said it planned to close its office in Doha as a result of the disappointment surrounding its offshore gas discovery Al Radeef. The Kassel-based company, a unit of the German chemical maker BASF, said it would hand back its license to explore Block 4 North off the Qatar coast next week.
“We’ve had close ties with Qatar for decades,” said Martin Bachmann, the Wintershall board member responsible for the company’s Middle East operations. “Therefore we didn’t take the decision overnight. However, we are confronted with difficult external conditions.”
“Our analysis and technical studies clearly demonstrated that we need access to the existing infrastructure for the Al Radeef project to make commercial sense,” he said. “This access has not been granted to us. It is therefore not possible to economically develop the field at the moment.”
Mr Bachmann reiterated the company’s commitment to the Middle East, saying that it would continue to coordinate its regional activities from Abu Dhabi. The company has historically focused its efforts on Europe, Russia, North Africa and South America, but it is expected that its regional headquarters in Abu Dhabi will increase in size as the region gains more importance.
Wintershall said last year that it was planning to invest €4 billion (Dh16.35bn) globally in the next five years and Abu Dhabi is expected to get the lion’s share of the Middle East’s portion.
“Our focus remains on the Middle East,” Mr Bachmann said. “We want to develop other projects in the region. We are very closely watching the developments in the region. Together with local partners, we are investigating, among others, the use of enhanced oil recovery technology.”
Qatar Petroleum, which was Wintershall's partner in the country, said earlier this month that it planned to restructure to find new ways to meet the challenges of lower energy prices. Qatar is the world's biggest producer of liquefied natural gas.
An analyst who did not want to be named said that Wintershall’s departure may be related to that shake up at Qatar Petroleum. No one at Qatar Petroleum was available to comment and Wintershall officials did not respond to requests for information on why access to local infrastructure was denied.
Wintershall’s departure comes on the heels of the cancellation of other high-profile projects in Qatar.
Qatar Petroleum and Royal Dutch Shell ended plans to build a US$6.5bn petrochemicals plant in January amid the drop in crude prices. The price of oil has dropped more than 60 per cent since last June.
mkassem@thenational.ae
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