Qatar Pivots to Energy Investment Abroad as Home Projects Shrink

Image: Shell

Jan. 29 (Bloomberg) — Qatar is buying oil and gas fields from Brazil to the Congo as the biggest liquefied natural-gas producer sees fewer energy developments at home.

Qatar Petroleum International Ltd.’s $1 billion purchase of 23 percent of the Parque das Conchas oilfield off Brazil from Royal Dutch Shell Plc is the latest of three foreign deals in the past year. It completed the acquisition of 15 percent of Total E&P’s Congo unit in December, injecting $1.6 billion.

QPI also teamed up with Centrica Plc in April to buy gas fields in Canada from Suncor Energy Inc. for $981 million.

Qatar, which became the richest country per capita from gas sales, doesn’t plan to boost exports amid a moratorium on more development of its North Field, the largest gas reservoir in the world. Slowing domestic energy investment comes as the country needs to fund $200 billion in infrastructure before hosting soccer’s 2022 World Cup amid weaker economic growth.

“Qatar is buying stuff because they’ve got money to spend: It’s called diversification,” Tom James, a Dubai-based managing director at Navitas Resources Ltd., an adviser on energy and commodity markets, said today in a telephone interview.

The stake in Parque das Conchas, known as BC-10, is Qatar Petroleum International’s first investment in South America, it said in a statement. Qatar also applied to export LNG from the U.S. through an import terminal in Texas and formed Nebras Power in 2013, a $1 billion fund to invest in water and power abroad.

ABOUT BC-10 (via Shell)
Strategic Investments

“BC-10 demonstrates our commitment to expanding our strategic and international investments globally,” Chief Executive Officer Nasser Al Jaidah said in the release.

Qatar’s economic growth will slow to 4.6 percent this year as gas exports level off, the development planning ministry said in December. That’s down from expansion of 17 percent in 2010, according to the International Monetary Fund, which estimates its 2 million people share a $200 billion economy.

The emirate doesn’t plan to build more domestic LNG plants after it started up the last of 14 two years ago, increasing annual capacity to 77 million metric tons from zero in 15 years.

Qatar is due to complete the Barzan gas development, which supplies the domestic market, by next year. Its crude oil output, which totaled 720,000 barrels a day last month, is falling even as it invests to revive some aging fields.

The slowing growth may lead to “modest” budget deficits from 2015 through 2017, Citigroup Inc.’s Farouk Soussa said in a report last year. This as the country invests in new soccer stadiums, roads and a $35 billion rail and metro system.

Qatar used income from rising LNG sales in the past few years to buy stakes in Barclays Plc, the U.K.’s second-biggest bank, and Volkswagen AG, Europe’s largest automobile maker.

The purchase in Brazil is “really a general strategy to simply put to work the money they have outside their economy, which is very small,” Philippe Dauba-Pantanacce, a senior economist at Standard Chartered Plc, said today by telephone. “They do have an expertise in energy, they have knowhow.”

– Robert Tuttle, Copyright 2014 Bloomberg.

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