History of Qatar: The Discovery of Oil

History of Qatar: The Discovery of Oil Last updated on Thursday 22nd April 2010

Petroleum was discovered in commercial quantities in Qatar in 1939 and was first exported in 1949. Oil revenues have given Qatar a substantial income and a high standard of living. Exploratory drilling in Qatar began in 1938 and Oil was discovered in Dukhan on the west coast in 1939. By 1940 Qatar was producing about 4,000 barrels per day. The Second World War halted the development of oi production, which resumed between 1942 and 1947, but exports began in 1949. The Dukhan field extends south from Dukhan along the west coast and has three oil reservoirs layered progressively deeper between limestone formations and a natural gas field underlying them all

In 1952 Shell Company of Qatar (SCQ), obtained a concession for offshore exploration on the continental shelf. Most offshore discoveries centered on the island of Halul, which is located at about ninety kilometers east of Doha. The major offshore fields and the dates they were discovered are Idd ash-sharqi (1960) and Maydan Mahzam (1963). Offshore production began in 1964. Another offshore field was discovered in the summer of 1991 by Elf Aquitaine Qatar. Combined offshore and onshore reserves as of January 1990 were 4.5 billion barrels, offering about thirty-two years of production at 1989 levels.

To gain some leverage over the oil company with regard to revenues, pricing, and production, Qatar joined the Organization of the Petroleum Exporting Countries (OPEC) in 1961, one year after it was formed. Qatar has stayed close to its OPEC production quota when it has been in its economic interest but has often exceeded its quota to compensate for soft markets or to take advantage of the price increases that resulted from the Iraqi invasion of Kuwait in August 1990.

Between 1960 and 1970, annual oil production more than doubled, from 165,000 bpd to 363,000 bpd. In 1973, production reached 570,000 bpd. Between 1974 and 1980, production as in the range of 410,000 bpd to 520,000 bpd. Except for a small recovery in 1984, there was a steady decline in the production in the early 1980’s to 415,000 bpd. Production levels rose again in the late 1980’s and early 1990’s: 402,000 bpd was produced in 1990.

The Qatar National Petroleum Company was established 1972 to handle oil operations. In 1973 the government held 25 percent each of QPC and SCQ. Two years later, the Qatar General Petroleum Corporation (QGPC) was established and the government signed new agreements with the oil companies giving QGPC an ownership of 60 percent. By 1977 on-shore and off-shore operations were totally nationalized.

QPC-owned refinery started work with a capacity of 600 bpd; refining capacity had reached 6,000 bpd by 1975, 10000 in the 1980s another. The national total capacity reached more than 60,000 bpd due to the opening of a new refinery. The National Oil Distribution Company refined an average of 62,000 bpd in 1990.

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