Maritime matters

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Nakilat's managing director speaks exclusively to Oil & Gas Middle East about LNG's nautical pipeline.

Nakilat, which means "transport" in Arabic was established in 2004 by the State of Qatar to coordinate the overall transportation requirements for all LNG projects in the country. The primary role of Nakilat is to own and operate a large fleet of LNG carriers, which will serve Qatar's LNG mega-projects, such as those of Qatargas and Rasgas.

Qatar holds the third-largest reserves of natural gas in the world which has already attracted massive investment. It is estimated that by the year 2011, Qatar will export 77 million tonnes of LNG annually to global markets, making Qatar the world's largest exporter of LNG.

Nakilat Inc. was established to provide wholly-owned Qatari midstream shipping capacity for the transport of Qatari LNG, thus linking the upstream and downstream components of the value chain.

Nakilat will provide the vital link that connects the significant upstream investment described above with gas markets and customers around the world.

This is consistent with the operating philosophy of full-chain integration where Qatar Petroleum and its upstream partners seek to achieve significant involvement in all segments of the LNG value chain.

As part of that progression, and in order to create a vehicle for private investment in the LNG industry to Qatari citizens, Nakilat's activities are currently purely focused on the transportation of LNG to global markets.

Ownership is held 50% by its founding shareholders and 50% by the public as a result of an IPO in 2005.

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The company is building an impressive fleet of state of the art vessels to transport LNG produced from Qatar's gigantic North Field, the world's largest non-associated gas field with approximately 15% of the world's total proven reserves, to global markets. By 2010, Nakilat expects to own up to 54 LNG vessels, making it one of the largest LNG ship owners and transport companies in the world.

With its range of gas-based export projects and an expanding portfolio of gas expansion schemes, Qatar has proved as one of the most adaptable Gulf States in opening its doors to foreign direct investment. Nakilat is one such example of this investment opportunity.

Oil & Gas Middle East spoke to Muhammad Ghannam, Nakilat's managing director and man at the helm, about the company's achievements to date, and aspirations for the future.

"Our decision to enter the global LNG chain in 2002 was taken when the first major LNG trains in Qatar with ExxonMobil and QP was announced, which was followed by two trains for Ras Gas and one more train with ConocoPhillips and Shell. So we were looking at 6 mega-trains coming on stream with a capacity up to 77 million tonnes per annum," Ghannam explains.

"The Nakilat business model is built around the principals of being flexible and stable. The company was established as an investment vehicle to promote investment opportunities for the average Qatari person. Qatar is really promoting opportunities for its people to save and invest for the future," he says.

The company reached an amicable agreement with QatarGas and RasGas that they would sign 25 year charters on the vessels, with extension options.

"We determined the rate of return that we wanted to give to our shareholders and this was a mutually beneficial arrangement. This is important because it's a very secure investment for our shareholders. As soon as we sign the construction contract with the yards in Korea we also sign the 25 year charter agreement back-to back, so the risk to us once we deliver the ships is really zero, because the revenue from the charters starts to flow immediately."

Since inception, Nakilat has formed a number of joint ventures with international shipping companies, with non-operating equity interests, ranging from 20-60%, in 29 LNG vessels.

These international shipping companies include global giants such as Maran Gas, Teekay, OSG, MOL, Mitsui & Co, NYK, K-Line, among other major shipping brands.

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