TBY talks to Nasser Al-Jaidah, CEO of Qatar Petroleum International (QPI), on the founding of QPI, future downstream investments, and international markets.

What led to the founding of Qatar Petroleum International (QPI)?

QPI was founded with the aim of securing a prosperous future for Qatar through the creation of strategic and commercially attractive international investments across the energy value chain. QPI leverages existing inter-governmental and IOC relationships to become a partner and supplier of choice across the industry, and, ultimately, to develop into a worldwide investor through the acquisition, development, and operation of an integrated portfolio of assets in the areas of upstream, gas and power, and downstream petrochemicals.

What are the goals of the Nebras Power joint venture, and what was the vision behind it?

The main objective of establishing Nebras Power was to introduce a global Qatari player to the power, electricity, and water industries, and to harness the synergy and extensive experience of the three Qatari shareholding companies. This venture will not only bring together Qatar Electricity and Water Company (QEWC), Qatar Holding (QH), and ourselves under one roof with an aligned strategy, but will also strengthen cooperation between Qatari companies, and, in turn, bolster Qatar's global investment outlook. Moreover, it will take full advantage of the economies of scale and scope that a multi-billion dollar mega-investment company is able to leverage. QEWC will own 60% of the joint venture, and QPI and QH will each own 20%. The shareholders have initially invested $1 billion as startup seed capital to stage the future funding of larger-scale investments. The main investment principles in forming this company include diversifying assets, maturing technology, minimizing risk exposure, optimizing returns, growing Qatar's human capital on the global stage, and positioning Qatar's strategic interests for the long term. The venture's shareholders seek to achieve its set goals within the next three-to-five years. I think that as a result, Qatar is becoming a large player in the power sector. It fits well within QPI's value chain and it utilizes all of Qatar's strengths. Instead of the country's influential companies competing with each other, we complement one other.

“As an emerging international arm of QP, QPI has an ambitious plan and strategy to enter international energy markets."

What have QPI's main downstream investments worldwide been, and what plans do you have for future investments?

To date, QPI has secured several investments for its downstream activities. In 2008, QPI signed an agreement with Shell and Petro China (an arm of the state-owned China National Petroleum Corporation) to develop a world-class integrated refinery and petrochemicals complex in Taizhou, Jiangsu Province, China. In 2009, a joint venture company was formed between QPI and Shell Singapore, providing QPI access to the integrated olefin and polymer value chain in Southeast Asia. In 2011, QPI signed an agreement with Siam Cement Group of Thailand and Petro-Vietnam, to develop a petrochemical project in Vietnam. Currently, QPI, together with Egypt General Petroleum Corporation and Citadel Group, is developing a secondary refinery in Cairo. This project is in the EPC phase and is expected to start operations in 2016. When complete, it will treat fuel oil to produce high-quality diesel and gasoline, and will virtually halve the import of expensive motor fuels, as well as cut environmental emissions. Going forward, we will continue to develop other opportunities in line with our strategy of diversifying within the industrial sector. We are working to become part of the value chain and to create a meaningful energy portfolio based on three pillars: upstream and downstream activities, gas, and power. We would like to secure good resources in the upstream segment, which will constitute around 60% of our activities in the future. The downstream segment gives us the opportunity to diversify by going into the full stream of the value chain. Compared to other markets, the size and capacity of Qatar is a small niche for Qatar Petroleum (QP); it has to move into the international scene and diversify.

What potential does QPI see in African countries?

Apart from the established hydrocarbon provinces in the north and west, Africa has remained largely under-explored. Several new prolific hydrocarbon provinces have emerged in the last decade in the Central and East African rift basins (Sudan, Chad, Kenya, and Tanzania), as well as the intra-cratonic basins, such as Taudoni, Murdi, and others. These emerging hydrocarbon provinces have attracted small independent exploration companies and other major IOCs and NOCs. Exploration results have revealed encouraging results that point toward significant potentialities. From a business perspective, these technical and geological successes are encouraging; however, they are countered by several commercial and political factors, such as a lack of infrastructure, weak domestic economic growth, insurgents and civil wars, and some inter-state tensions. Nevertheless, QPI is capitalizing on the positives, while seriously considering and mitigating negative risk factors. We approach these challenges as potential opportunities.

What upstream investments are in the pipeline for QPI, both in Africa and elsewhere?

As an emerging international arm of QP, QPI has an ambitious plan and strategy to enter international energy markets, including upstream, downstream, and gas and power. Upstream investments require more and more stringent analysis and due diligence. The short-term plan focuses on risk-adverse ventures by leveraging government-to-government relations, and by capitalizing on relationships with major IOCs that are built on trust and the long-term relationship with Qatar. In the near future, we see QPI becoming a major integrated energy player that can venture into exploration growth opportunities. In regards to this, QPI has embarked on two projects. First, in April 2008, QPI acquired a 20% stake in two blocks of the Mauritania Exploration Venture and became part of the venture as a non-operator with Total E&P-Mauritania. The agreement marked the first upstream investment by QPI overseas. The drilling commenced in 2009 on a land area of 58,000 square kilometers and exploration activities are still in progress. Secondly, in May 2013, QPI signed an agreement for our intention to participate in a capital raising exercise for Total E&P Congo, which, if completed, would result in taking on 15% of that company's equity. Additionally, QPI remains active in studying and analyzing various opportunities on a relatively unexplored continent, with the objective of maximizing our share across various energy value chains. Under the leadership of His Highness the Emir, Qatar is emerging as a key player in the world business and political arena. Leveraging and building on this role, QPI is seriously considering several opportunities for energy projects in Africa. Also in line with this strategy, QPI is actively considering opportunities without geographical boundaries. The main objective is to build a financially, technically, and geographically diversified portfolio of upstream, downstream, and gas and power projects. While being risk-aware, we seize any value adding opportunity that meets our technical and economical criteria. Upstream projects in the pipeline include the acquisition of a sizeable interest in partnership with Centrica in the Suncor assets of the Western Canadian Basin, and evaluating additional direct energy assets in the Western Canadian Basin with the objective of acquiring a sizeable interest under the same partnership to create synergies. QPI is actively seeking investment opportunities on a worldwide basis in the energy sector where it can have an active, rather than passive, financial participation. Based on the amount and variety of business opportunities and projects that Africa can offer, and the strategic relationship that Qatar enjoys with African countries, that region remains an area of focus and indeed, a priority for QPI.

© The Business Year - October 2013