Qatar exports super-chilled liquefied natural gas for its Ras Laffan facility in specifically designed tankers.
Qatar exports super-chilled liquefied natural gas for its Ras Laffan facility in specifically designed tankers.

Route 77 leads to milestone in Qatar's gas exports



RAS LAFFAN // Qatar, the tiny Gulf emirate riding high on its recent victory in an international contest to host the 2022 FIFA World Cup, likes its achievements to be large.

The US may have its Route 66 but Qatar has gone 11 better with Route 77.

The fresh tarmac, its blackness still unsullied by salt-laden sand, coats a stretch of motorway formerly known as Ras Laffan Main Avenue.

The road, now called Route 77, starts abruptly about 60km north of Doha, marked by a large road sign in maroon and white, the colours of the Qatari flag. There, the monotony of the salt flats is broken only by the occasional sight of goats or camels foraging among low bushes. At the end of the 13km of the black stuff, however, lie the heavily guarded gates of Ras Laffan Industrial City, the pre-eminent symbol of modern-day Qatar, which is built on gas wealth and whose citizens enjoy the highest per capita income in the world.

Inside those gates, Qatar Petroleum (QP) and its partners - a select group of international oil companies - have built a huge conglomeration of gas-processing and chemicals plants, shipyards, dry docks, storage facilities and export terminals that make up one of the world's largest industrial ports.

"This is the largest man-made harbour in the world," says Capt Feisal Saad, Ras Laffan's harbour master.

This is also where QP's two gas-exporting subsidiaries, Qatargas and RasGas, together with partners including ExxonMobil and Royal Dutch Shell - respectively, the biggest US and European-based international oil companies - have just finished building production facilities for up to 77 million tonnes per year of liquefied natural gas (LNG), more than doubling Qatar's previous LNG output capacity.

Based on consumption data from last year, this means Qatar could supply more than 30 per cent of total Middle East gas demand. Alternatively, in 12 months it could export enough gas to keep Greater London supplied for more than 16 years.

Whether or not Qatar ever utilises its entire capacity, the Ras Laffan development has consolidated its position as the leading exporter of the super-chilled gas that is carried across oceans in specially designed tankers.

"Many years ago, when Qatar set out to achieve the 77 million tonnes per annum target, this landmark was considered an ambitious goal," said Abdullah al Attiyah, the long-serving deputy prime minister and energy minister of Qatar. "Today, Qatar has fulfilled this ambition and has built the flexibility to deliver LNG to any market where there is demand.

"This is the result of many decades of prudent planning and utilisation of global best practices across all our operations, due to which the state of Qatar has also built great credibility within the global energy community."

Mr al Attiyah described the enormous LNG expansion as "the cornerstone of our country's development strategy", from which Qatar planned to diversify into petrochemicals and other industries for which access to large, inexpensive gas supplies would be a distinct advantage.

From the deck of a sturdy blue tug boat, the most prominent features of the Ras Laffan port are six jetty-mounted flare stacks paired with loading arms, some attached to tankers filling up with LNG.

Boulders held together with salt-resistant cement form an outer breakwater high enough to block the tidal waves that occasionally cross the Gulf from earthquake-prone Iran.

But, according to Royal Boskalis Westminster, the Dutch group that built the harbour in co-operation with the dredging firm Jan de Nul, the US$2 billion (Dh7.34bn) development's "sheer size" is best appreciated from space.

The recently completed project has more than quadrupled the capacity of the original harbour, built in 1992.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Name: HyperSpace
 
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Sector: Entertainment 
 
Number of staff: 210 
 
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