Last week, Pearl GTL was officially inaugurated in Qatar. It is a joint project between Qatar Petroleum (QP) and Shell for the production of petroleum derivatives from natural gas. This cutting-edge industry represents an important and fundamental shift in the oil industry, since derivatives like diesel, jet fuel, naphtha, ethane, etc., were earlier produced by refining crude oil. Now, it is possible to obtain these derivatives from natural gas as well, at better specifications compared to derivatives produced from refined crudes, owing to the fact that they are nearly free of sulfur. This renders them in line with strict environmental regulations. Pearl GTL is the second project of its kind in Qatar after the Oryx GTL project, established jointly between QP and South Africa's Sasol. However, Pearl GTL is much larger than Oryx GTL. In truth, it is the largest refinery of its kind in the world, and is set to give Qatar an important role in this emerging industry. The design capacity of Pearl GTL in phase I and phase II is about 140 thousand barrels per day and 120 thousand barrels per day of liquefied petroleum gas and condensate and ethane respectively, compared to a design productive capacity of 35 thousand barrels per day of diesel, naphtha and gas liquids produced in Oryx GTL. The estimated total cost of the Pearl GTL project is 18.5 billion dollars and there is a large demand for its products owing to the fact that they contain no environmental pollutants. What does the production of petroleum derivatives from natural gas mean? For gas-rich nations like Qatar, this means the ability to obtain an additional value for their gas reserves. In the past two decades, QP has managed to build a natural gas productive capacity of 77 million tons annually, and to export gas through the Dolphin Project pipelines to the UAE and Oman. This is in addition to producing and exporting natural gas associated condensates, as well as using gas locally in power generation, desalination and petrochemical plants. It was not an easy task for Qatar to enter the natural gas industry in the beginning, especially the liquefied natural gas (LNG) sector. As a matter of fact, this type of industry requires advanced technology and markets that have confidence in the reliability and credibility of the state undertaking production in this sector. There were many doubts and questions in the seventies, especially on the part of Japanese importing companies, in the early stages of the Qatari gas industry. However, what has helped Qatar in its march is the global markets' affinity for wide-scale consumption of natural gas, as a clean fuel for producing energy, and the gradual improvement of both the economics and prices of natural gas. This is not to mention the determination and political will in the country to develop the gas industry, and QP's management, which is characterized by transparent operations and a keenness on strengthening bonds with international oil companies through multiple partnership, and by benefiting from their expertise, technology, and marketing capabilities. In fact, this is precisely the case with Gas to Liquids (GTL) projects. The project for converting natural gas to derivatives will be able to supply ecofriendly petroleum products, albeit limited in volume compared to the overall volume of crude oil available in the markets - currently estimated at 90 million barrels per day. Subsequently, this development will also help in the sustainability and improvement of oil markets, and will not create competition for conventional oils, since converting gas to derivatives requires huge natural gas reserves, which is restricted to just a handful of countries so far. Needless to say, Qatar has been able to build its gas industries thanks to its huge natural gas reserves in Qatar's offshore North Field (900 trillion cubic feet). In fact, it was not possible to establish a GTL industry without these large reserves of gas. For one thing, this industry requires in particular the production of very large quantities of gas. As such, current LNG, GTL and other projects require the production of around 24.6 billion cubic feet of gas per day. Qatar's involvement in these multiple gas-based industries means that it is indeed producing large quantities of natural gas on a daily basis, while the fact that Qatar is investing billions of dollars in these projects means that it has to ensure that there is demand for these products for long years and even decades. The gas industry today, as is the case with the oil industry and other energy industries in general, is changing continuously and facing competition from many directions. The best example of this is the recent emergence of the shale oil and gas industry. Despite their limited production volume, the production of shale gas in the United States, formerly the world's largest importer of gas, is such that the country is exporting limited quantities of it at present. This shift has impacted international gas markets and prices, especially in Europe. For these reasons, oil and gas exporting countries are calling for guarantees for their exports and for consumer countries to bear some of the risk arising from these investments. Just like consuming countries call for guarantees for oil supplies, exporting countries call for guaranteeing markets for their exports. This is because the projects they are undertaking require investing billions of dollars, and this highlights the joint responsibility for both exporters and importers. The industry of turning gas to petroleum derivatives also underscores the importance and vitality of technology in opening new doors for the oil industry, and for the improvement of the quality of hydrocarbons in terms of becoming more ecofriendly- an important demand raised by the public worldwide, and a positive factor for this giant industry. *. Mr. Khadduri is a consultant for MEES Oil & Gas (MeesEnergy)
