Golden Pass will give Qatar access to US LNG that could supply Europe, freeing up the country’s own LNG to send more to Asia or to optimise deliveries between the Atlantic and Pacific basins, according to the Al-Attiyah Foundation.
National Oil Companies' (NOCs) investments in gas has been a “major trend”, Al-Attiyah Foundation said in a research paper and noted “Qatar has sought to support its LNG business by expanding internationally with new liquefaction projects, receiving terminals and exploration that might one day support LNG or pipeline gas projects.”
“The international oil business is very competitive,” the research paper noted. Middle Eastern NOCs have to match International Oil Companies (IOCs) supermajors, smaller independents and internationalised NOCs," according to the paper.
This, it said, “may partly explain why NOCs non-domestic exploration and businesses have remained relatively small, even in the case of a company such as Equinor (a Norwegian multinational energy company), which is as technically and commercially capable as IOCs.”
“QP stands out for its exploration success. It will now have the interesting challenge of working with its partners to commercialise its discoveries,” Al-Attiyah Foundation said.
In the downstream (refining, petrochemicals, storage and retail) the availability of guaranteed crude supplies has proved a powerful draw-card.
The importance of international investments fluctuates with conditions at home. When oil prices are low and resources short, “foreign ventures may be looked at sceptically” by politicians and bureaucrats, the paper said.
“And when companies get into trouble at home, as Petrobras did over its corruption scandal and massive debt load, the temptation is also to sell off international assets to refocus at home,” the research paper said.
“Middle East NOCs international expansion will continue,” Al-Attiyah Foundation noted.
Overall, they will concentrate more on gas, particularly LNG and cross-border pipeline projects, and on integrated refining and petrochemicals in growth markets, mainly in Asia.
Their presence in sub-Saharan Africa’s downstream is “surprisingly low”, but this will change as markets there grow to more material scales.
As IOCs “come under more pressure” from shareholders, NOCs may find more opportunities in the downstream than they have historically.
Therefore, their international upstream business will also grow, but to be comparable in size to their domestic production, they will need to achieve major exploration success, spend heavily on acquisitions, and/or strike large strategic deals with governments, most likely in Russia.
Commercial success in the upstream will require NOCs to assess where their strengths lie – for instance – in LNG, deepwater, heavy oil, enhanced oil recovery or other specialities and to boost or acquire these strengths.
Middle East NOCs have not yet begun to invest in non-hydrocarbon energy internationally, unlike for instance Equinor, Shell and Total, but this may also become a future option, Attiyah Foundation said.
Contrastingly, commercial success in the downstream will be driven by the ability to access attractive markets to gain across the value chain, to deploy leading technologies, and to achieve operational excellence.
“Managing these expanding foreign activities will require NOCs to improve their capabilities, not just in the technical and commercial spheres, but in stakeholder management, public and government relations, environmental impact and other areas. They will have to be prepared for a much greater degree of challenge and scrutiny,” Al-Attiyah Foundation said.
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