Qatar Petroleum set to merge LNG producers Qatargas, RasGas to cut costs
A plan to integrate the activities state-owned liquefied natural gas producers Qatargas and RasGas Co Ltd has been recently announced by Qatar Petroleum (QP) president and CEO Saad Sherida Al-Kaabi, in a move that marks Qatar’s latest reaction to lower energy prices.
The more-than-two-year slump in oil prices has forced Gulf countries to reduce state spending and consider consolidations as a way to cut costs: among the biggest being Abu Dhabi’s merging of Mubadala and International Petroleum Development Co.
While Qatar is more focused on gas than oil, it too has been forced into reorganizations, with QP already going through a process that reduced staffing and earmarked a number of assets for divestment.
The tie-up of Qatargas and RasGas, Qatar’s number one and two LNG producers respectively, has been talked about for a number of years stretching back before the oil price reduction.
Al-Kaabi said “the integration aims to create a truly unique global energy operator in terms of size, service and reliability”. He added that they will “merge the distinctive resources and capabilities of Qatargas and RasGas to create even higher value for our stakeholders, and enhance our competitive position”.
He said that the integration process is planned to start immediately and is expected to be completed within the next 12 months, noting that the existing operations groups within both companies will not be impacted at all by the integration, as the highest priority is given to ensuring a safe, seamless and risk-free business continuity.
He told reporters that the integration of the activities of these two energy centers of excellence means that upon completion, there will be a single expanded and enhanced operating entity, named Qatargas, that will operate all of Qatar’s liquefied natural gas (LNG) ventures.
“The collective resources, talents, and capabilities of two global leaders will be joined to create an even more effective and efficient organization to uphold the best interest of the State of Qatar, our customers, and our shareholders,” the President and CEO of Qatar Petroleum added.
Once the new structure is in place, some areas of the business could see job cuts, although the operational side of the plants will not be affected, Kaabi said.
Qatargas is the largest LNG-producing company in the world, with an annual output capacity of 42 million tons a year, according to its website. While QP owns a majority stake, global energy firms including Total, Mitsui & Co, and Conoco Phillips also possess small stake holdings.
RasGas has a production capacity of about 37 million tons a year, according to its website. It is a 70/30% joint venture between QP and Exxon Mobil.