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OPINION: Qatar Petroleum in expansion mode

Latest foray into Guyana is part of strategy to have a diversified portfolio based on funds from its vast LNG output

OPINION: The headlong plunge by Qatar Petroleum (QP) into yet another offshore frontier area is part of an aggressive exploration strategy designed to eventually propel the Qatari state company into the top tier of global upstream players.

Its latest foray takes QP into virgin territory in Guyana, where it snapped up minority stakes from France's giant Total in acreage close to the prolific ExxonMobil-operated Stabroek block.

QP in the past two years has expanded its footprint to coveted frontier areas around the globe, picking up assets in the East Mediterranean, Africa, the Middle East and South America.

The long-term objective is to have a diversified exploration portfolio that can help it compete with major international oil companies that are vying to enlist QP as their partner thanks to its deep pockets and role as the world's largest producer of liquefied natural gas.

The likes of ExxonMobil, Shell, Total and Italy's Eni, which is not yet a partner in Qatar's domestic LNG sector, have only been too keen to curry favour with QP by sharing high-profile exploration acreage in the hope of landing a slice of the action in Qatar's current massive LNG expansion plans.

QP steps into Guyana with Total farm-in

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Apart from bolstering its stature on the global energy stage, the upstream push will also help enhance Qatar's diplomatic standing at a time of an economic blockade by Arab foes led by Saudi Arabia for Doha's alleged support of extremist Islamist groups and close ties with Iran.

Qatar's pursuit of an independent foreign policy is anathema to Saudi Arabia, which advocates a unified Arab stance against Iran, with which Qatar shares the North Field.

Known in Iran as South Pars, the North Field is the world's largest offshore gas reservoir, supporting Qatar's current production of 77 million tonnes per annum of LNG in partnerships with ExxonMobil, Shell, Total and ConocoPhillips.

Qatar's nascent exploration push abroad is already bearing fruit. Partner ExxonMobil in February unveiled a massive gas discovery estimated at up to 8 trillion cubic feet off Cyprus.

The architect of Qatar's global ambitions is QP chief executive Saad al-Kaabi who says Qatar, which produces 4.8 million barrels of oil equivalent per day, aims to increase output to 6.5 million boepd in the next eight years, giving it more production clout than ExxonMobil.

Domestic growth will mainly be driven by the expansion of Qatar's LNG sector to be able to produce as much as 110 million tpa by 2024.

International oil companies are competing to partner with QP in delivering that 40% LNG expansion programme, which will cement QP's position as the world's largest LNG producer for decades to come. Qatar's LNG expansion has been phenomenal to say the least, growing from less than 1 million tpa in 1991 when the Middle East producer first started exports.

While pursuing the domestic gas export expansion, QP is also investing in LNG projects that will give it a more dominant role in the global trade.

It has taken a majority stake in the Golden Pass terminal in Texas by partnering with ExxonMobil and ConocoPhillips in a move that could be the catalyst to add upstream assets in the US.

These US investments are seen as having the dual benefit of helping to enlist Washington's support in ending Qatar's isolation in the Arab world.

Further E&P expansion around the world may also help in this direction while ensuring that the tiny Middle East producer punches well above its weight in the energy sector for many years to come.

(This is an Upstream Opinion article.)

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