President Uhuru Kenyatta meets Qatari minister for Transport, Jassim Seif Al-Sulaiti, in Doha during his recent visit. The country is the global best practice in natural gas value addition. Photo/FILE
What you need to know:
Capital flow and experience from oil and gas managers make list of key gains.
The recent presidential trade mission to Qatar is an indication that for Kenya, international trade need not be entirely defined in terms of West or East.
In deed investment capital and business opportunities do exist in the Middle East. Qatar is one of the successful and progressive ‘petro-dollar’ economies of the Middle East that can do good business with Kenya.
To many Kenyans, Qatar is the home to the popular Aljazeera TV and also the country that surprised many by bidding and wining to host the 2022 FIFA World Cup.
However, what is outstanding about Qatar are its successful oil and gas enterprises that have set the country apart as a global best practice in natural gas commercialisation and value addition.
Qatar has the third largest proven reserves of natural gas in the world after Russia and Iran. When global energy demand exploded about 10 years ago, opportunities to commercialise Qatar natural gas reserves opened up.
About the same time, there was environmental clamour (Kyoto Protocols) across the developed world to convert to lower carbon fuels of which natural gas was a strong candidate to replace high carbon coal.
However, Qatar natural gas was “distant” from the key energy demand centres of Europe and Far East since it could not be easily transported by pipelines to these markets.
This prompted Qatar and other “distant” natural gas producers to develop appropriate technologies to transship refrigerated natural gas liquid (Liquefied Natural Gas-LNG) to these markets. Today Qatar is the leading global exporter of LNG.
It looks like the priority agenda for the Kenyan delegation was to commit Qatar to supply LNG for its planned 700MW power plant in Mombasa. This is part of the “5,000MW in 40 months” power generation program currently under implementation by the Jubilee government.
Incidentally Qatar also has an installed power generation capacity of about 7,800MW, mainly using natural gas. This fact may additionally make Qatar a potential investment partner in the Mombasa LNG power plant.
The Kenyan energy authorities have previously stated that power generated from imported LNG shall lower the weighted average cost of Kenyan electricity. It can, therefore, be assumed that the LNG prices offered by Qatar will make this objective achievable.
It would be a sweet surprise for Kenya if the completion of the planned Mombasa LNG power plant coincides with commercial discoveries of natural gas from the ongoing exploration efforts at our coastal areas.
Power generation is most of the times the first line of commercialisation of locally produced natural gas.
Further south in Tanzania and Mozambique there will be (in about four years time) availability and exports of LNG which could become an alternative source of LNG for the Mombasa power plant.
In respect of natural gas value addition, it is in the area of Gas to Liquid (GTL) technologies that Qatar has won global accolades.
In partnership with Shell, Qatar has the most elaborate processes for making liquid petroleum products (like petrol , jet fuel, diesel, base oils) not from crude oil refining but by synthesising the simple natural gas molecules.
GTL products are very popular in countries with stringent emission regulations since they are virtually without sulphur or nitrogen pollutants.
The other areas of natural gas value addition perfected by Qatar are in petrochemical manufacture. This includes nitrogen-based fertilisers which use natural gas as a key raw material. Other natural gas-based petrochemicals manufactured by Qatar are polymers used for various plastics.
Let us now look at potential investment opportunities that can accrue from Kenya’s association with Qatar. It is the stated goal of Qatar to become a major international centre for finance and investment management. And this is already happening successfully and in a big way.
Right protocols
Qatar revenues from oil and gas are more than the country’s budgetary requirements and these surpluses are invested in its Sovereign Wealth Fund which is entrusted to the Qatar Investment Authority (QIA).
The value of the fund assets is understood to currently stand at about $170 billion in Qatar and across the world. The Qatar investment funds provide a point of convergence with Kenya’s investment ambitions.
Availability of investment capital from QIA can find its home in various projects in Kenya especially those structured along the lines of PPP.
Moreover, profitable private businesses in Kenya seeking to set up or expand can raise cash from the Qatar financial markets.
With the right and enabling government-to-government protocols, flow of capital into Kenya, and indirectly into the region can be made to happen.
Entry point
Finally, there is a lot that Kenya can learn from Qatar, especially in areas of oil and gas revenue management and also natural gas value adding technologies should Kenya discover commercial quantities of natural gas.
For Qatar, Kenya can be an appropriate entry point into the regional markets for investments and financial services.
The new opportunities offered by Qatar should be pursued to conclusion so that the Kenya economy realises early benefits.
Mr Wachira is the director, Petroleum Focus Consultants. [email protected]
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
