(MENAFN- The Peninsula) By Mohammad Shoeb I The Peninsula
Qatar Petroleum (QP) signed an agreement with Eni, the Italian energy giant, to acquire a 35 percent participating interest in three offshore oil fields in Mexico.
The agreement covers the Amoca, Mizton, and Tecoalli offshore oil fields, which lie in Area 1 in Mexico's Campeche Bay.
The agreement is subject to customary regulatory approvals by the government of Mexico. Following such approval, both Eni and QP will jointly hold 100 percent interest in the Area 1 production sharing contract.
Commenting on this agreement, H E Saad bin Sherida Al Kaabi, Minister of State for Energy Affairs and President & CEO of QP, said: 'We are pleased to sign this agreement, with our valued partner, Eni, to participate in the development and production of oil fields in Mexico. This agreement marks another milestone for Qatar Petroleum as it strengthens its international footprint and expands its presence in Mexico.
Al Kaabi added: 'QP is pleased to enhance its fruitful cooperation and partnerships with a major energy player like Eni. We are also excited about participating in this development in Mexico's Campeche Bay, and with first oil production expected by mid-2019, we look forward to collaborating with Eni to ramp up production to around 90,000 barrels of oil per day by 2021.
The National Hydrocarbon Commission of Mexico approved the phased development plan for Area 1 allowing for early production to start by mid-2019 through a wellhead platform in the Mizton field and a multi-phase pipeline for treatment at an existing Pemex facility.
The full field production is expected to be achieved in 2021 through a floating production, storage, and offloading facility with a treatment capacity of 90,000 barrels of oil per day. Two additional platforms will be installed on the Amoca field and the Tecoalli field. Area 1 is estimated to hold 2.1 billion barrels of oil equivalent, 90 percent of which is oil.
This is the second presence for QP in Mexico. At the end of January 2018, it won exploration rights in 5 offshore blocks in the Perdido and Campeche basins as part of a consortium comprising Shell and Eni, respectively.
In line with its growth plans, this opportunity represents another step in implementing Qatar Petroleum's strategy to expand its international footprint, and to pursue Latin America as an important core area for its upstream activities.
QP's international upstream footprint has been expanding recently in Brazil, Mexico, Argentina, Cyprus, Congo, South Africa, Mozambique and Oman.
Commenting on the QP's expansion projects, Al Kaabi said: 'These expansions go hand in hand with our previous announcements to develop and increase our natural gas production from 77 million tonnes per year to 110 million tonnes in the coming years; and to raise our production capability from 4.8 million barrels oil equivalent per day to 6.5 million barrels during the next decade.
In response to a question from The Peninsula on the feasibility of developing a gas pipeline infrastructure connecting energy-starved countries in the India-subcontinent, including Pakistan and Bangladesh though Iran to supply natural gas at competitive prices, Al Kaabi said it is difficult, as there is Iran which is closer to these markets and has a large natural gas production, hence Qatar decided to follow the LNG policy as it gives it the flexibility to choose the markets with no fear of it facing obstacles in reaching the target markets.
Analysts say that LNG is the cleanest form of fossil fuel, but due to liquefaction gasification and other cost, it becomes less competitive with coal and renewables in terms of power generation in these countries. For instance, Pakistan, where per unit cost of power in gas-fired plants is about 9 cents, while coal and renewables are between 5 and 5.5 cents. In this regard, Al Kaabi said that natural gas has a good reputation when it comes to the environment unlike coal, and countries choose what is appropriate to them, in light of international interest in the preservation of the environment.
On the challenges related to developing new LNG markets, especially in a scenario where oil price continues to hover around between $50 and $60 a barrel for a sustained and prolonged period, Al Kaabi said it is not easy to find new markets for LNG due to the requirements of infrastructure needed by these markets such as stations to receive LNG vessels, then converting it to its gaseous from and pumping it into pipes. For example, India which is a promising market but many of its areas do not have such infrastructure.
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