VZCZCXRO1272
PP RUEHDE RUEHDIR
DE RUEHDO #0174/01 0501038
ZNR UUUUU ZZH
P 191038Z FEB 07
FM AMEMBASSY DOHA
TO RUEHC/SECSTATE WASHDC PRIORITY 6211
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE PRIORITY
RHMFIUU/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUCPDOC/USDOC WASHINGTON DC PRIORITY

UNCLAS SECTION 01 OF 03 DOHA 000174 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EPET QA EINV
SUBJECT: C-TN6-01921: SASOL CHEVRON FIRST OF MANY IN QATAR 
GTL 
 
REF: A. 05 DOHA 934 
 
     ¶B. 04 DOHA 1323 
 
¶1. (U) Summary. Sasol Chevron's Qatar Country Manager and 
Public Relations Executive told Emboffs February 6 that the 
GTL industry is in the phase that liquefied natural gas was 
15 years ago, and they expect GTLs will follow the same 
course. Sasol's Oryx plant will produce 34,000 barrels per 
day (b/d) of liquids while Shell's upcoming Pearl project 
will produce 140,000 b/d and ExxonMobil's plant is expected 
to produce 154,000 b/d. Sasol Chevron officials described 
their efforts to employ Qataris and enhance Qatar's knowledge 
base in GTL technology. Future GTL projects are currently on 
hold for Sasol Chevron as Qatar has paused additional gas 
development and officials are waiting to compete not only 
with other international companies, but also with neighboring 
GCC countries. Sasol Chevron officials told Emboffs that the 
company intends to be patient in securing additional projects 
because they see a viable future for Qatar and GTL in the 
energy markets. End Summary. 
 
¶2. (U) Sasol Chevron was founded in 2000 with the 50/50 
merger of South African alternative fuel specialists, Sasol 
and U.S. oil giant, Chevron. Sasol Chevron officials told 
Emboffs that Chevron was looking for new businesses and saw 
potential in the gas-to-liquid (GTL) arena. Chevron sought 
out Sasol's expertise in GTL because of Sasol's work in 
Nigeria. The company combines Chevron's upstream knowledge 
and technology with Sasol's downstream skills. Sasol utilizes 
a proprietary process called the Slurry Phase Distillate 
Process to convert synthetic gas into a state to be "cracked" 
into marketable products. Sasol Chevron is a separate entity 
from the parent companies and is pursuing GTL projects apart 
from Sasol. For example, the recently-completed Oryx GTL 
project in Ras Laffan Industrial City is a Sasol venture, but 
Sasol Chevron officials work closely with the Oryx management 
because of their intentions to have expansion projects under 
Oryx. 
 
--------------------------------- 
NATIONALS CONTRIBUTING FROM START 
--------------------------------- 
 
¶3. (SBU) Pat Butcher, Sasol Chevron Country Manager, told 
Emboffs on February 6 that Qataris have been part of the Oryx 
project from engineering, procurement, and construction (EPC) 
stage, with about 25 percent of the workers from the national 
population. The original goal was 50 percent but because of a 
lack of qualified workers and cultural limitations, this has 
not been achieved. Qataris are involved in all aspects of the 
project from senior management to actual operators at the 
plant. According to Butcher, the company welcomes this 
transfer of technological expertise and has no concerns about 
intellectual property rights violations. 
 
¶4. (U) Butcher also said that in recruiting Qataris to work 
with Sasol Chevron and on the Oryx project, women are some of 
the best candidates. The top graduates from the engineering 
programs at Texas A&M-Qatar and Qatar University are female 
and Sasol Chevron would like to hire them, but because Qatari 
culture has not caught up with the idea of women in authority 
positions in technical fields, this process has been slow. 
Sasol Chevron has an outreach program with Qatari female 
engineering students in the hopes of hiring them in the 
future. 
 
----------------------------- 
MORATORIUM ON FUTURE PROJECTS 
----------------------------- 
 
¶5. (SBU) Currently, feedstock for the Oryx plant comes from 
ExxonMobil's Al Khaleej project in the North Field. Sasol 
Chevron wants to expand production in the Oryx plant from 
34,000 barrels per day (b/d) to 100,000 b/d but their plans 
are on hold, as Qatar Minister of Energy and Industry 
Abdullah bin Hamad Al-Attiyah has placed a moratorium on 
negotiating new natural gas projects until 2009 (ref A). At a 
conference last week in Abu Dhabi, Minister Al-Attiyah 
confirmed that the moratorium would be lifted in 2009, and 
that thereafter Qatar hopes to boost its output and exports. 
During the moratorium period, the Qataris will complete a 
resource review of the North Field. The review is meant to 
more accurately determine oil and natural gas reserves in 
order to formulate a prudent plan for production and 
allocation of these resources. Butcher told Emboffs that in 
the review, Qatar Petroleum is also looking below the North 
Field to more gas and oil resources, perhaps even doubling 
the current oil reserve numbers. The driver behind the 
resource review is Mr. Saad al-Kaabi, the U.S.-educated Qatar 
Petroleum Director of Oil and Gas Ventures. Mr. Ali 
 
DOHA 00000174  002 OF 003 
 
 
al-Sadiqqi will head the downstream portion of the review. 
Over the long-term, Qatar plans to become the "GTL Capital of 
the World," according to Minister al-Attiyah (ref B). 
 
---------------- 
THE GTL CATCH-22 
---------------- 
 
¶6. (SBU) The Oryx plant cost USD 1 billion in 2003 to 
construct-- mostly via project finance --but the same plant 
would cost USD 2-3 billion today because of the tight 
contracting market, according to Butcher. He also noted that 
the Shell's 140,000 b/d Pearl GTL project is expected to cost 
somewhere between USD 12-18 billion to build because of its 
magnitude and Qatar Petroleum says ExxonMobil's 154,000 b/d 
plant will cost USD 7 billion. The increased attention to 
alternative fuels and the booming energy market have 
generated numerous projects in Qatar and throughout the 
region which in turn is squeezing the contracting industry, 
resulting in larger EPC costs. While Butcher stated that 
higher energy prices and technology improvements make GTL 
projects more commercially viable at this time, he 
acknowledged that this might not have been the case in a 
quieter market. Nonetheless, Butcher told Emboffs that GTL is 
in the phase that liquefied natural gas was 15 years ago and 
that they expect GTLs to follow the same course. 
 
----------------- 
ORYX'S GTL MARKET 
---------------- 
 
¶7. (U) Butcher said there is a strongdemand for "clean" 
fuels such as GTL, especiallyin Europe where the entire Oryx 
product is expored. Europe has a huge demand for diesel 
because 0 percent of the cars there run on diesel fuel. 
Btcher claimed that vehicles run on GTL diesel enjo much 
better performance than those un on regular diesel. 
Currently world diesel usage is estimated at 12 billion 
barrels per day, but only a small fraction of this is 
GTL-based diesel. Butcher noted that old diesel refineries 
are not meeting the new higher standards for diesel 
production and GTLs may help them meet the new operation 
specifications and keep the older refineries in operation 
longer. While the primary end-product of GTL is diesel fuel, 
some naphtha and liquefied petroleum gas is also produced. 
 
----------------------------- 
SECURITY & POLITICAL CONCERNS 
----------------------------- 
 
¶8. (SBU) Butcher did not express any concerns about security 
at Ras Laffan and appeared generally pleased with the level 
of protection. He also did not express any worries about 
political and business instability in Qatar.  Butcher did 
acknowledge that Iran is a worry and that with big U.S. 
energy companies heavily involved in Qatar, Ras Laffan is a 
prime target for terrorists or Iranian agents to destabilize 
the Gulf. He also voiced some worry over who--GCC neighbors 
or foreign investors--would receive priority for Qatar's 
additional gas resources once the review is complete. Sasol 
Chevron is competing not only with other international energy 
companies but also the United Arab Emirates, Oman, and 
Bahrain for Qatar's gas. According to Butcher, the Shell and 
ExxonMobil GTL projects will receive their feedstock because 
those agreements were signed before the hold was in place. 
 
------------------------ 
SUCCESSOR TO AL-ATTIYAH? 
------------------------ 
 
¶9. (SBU) Butcher opined that if the powerful Minister of 
Energy and Industry Al-Attiyah ever stepped down, QatarGas 
Chairman and CEO Faisal al-Suwaidi is a likely replacement. 
Mr. al-Suwaidi has gained prominence in high circles of the 
Qatari government. He sometimes accompanies the Energy 
Minister on international visits and frequently appears in 
the media discussing major energy projects. 
 
------- 
COMMENT 
------- 
 
¶10. (SBU) Just as Qatar has begun to diversify its liquefied 
natural gas (LNG) customer base it is looking to GTL -- along 
with piped natural gas -- as ways to diversify its product 
line. Qataris believe that they can help create new markets 
and shape the industry, as they have done with LNG. In 
addition, Post agrees with Butcher's thought that Mr. 
al-Suwaidi is a potential candidate for future Minister of 
Energy and Industry, because of his knowledge of the energy 
 
DOHA 00000174  003 OF 003 
 
 
industry. However, al-Attiyah has been more than a CEO. He 
has been a veritable statesman on the world energy scene, 
helped by a highly engaging personality. Whenever he retires, 
the Amir of Qatar may seek someone broader - based than Mr. 
al-Suwaidi. End Comment. 
UNTERMEYER