Failed Partnership Wintershall Exits Qatar

After decades of involvement in Qatar, the German oil and gas producer is leaving the Arab country. The move comes following disagreements between the company and its Qatari partners over developing a newly discovered natural gas field off the country's coast.
Wintershall says good-bye.

Wintershall, a subsidiary of chemical giant BASF, announced on Wednesday its decision to terminate a natural gas exploration and production project in Qatar, close its office in Doha and, after more than 30 years, withdraw from the country completely.

Germany's largest oil and natural gas producer had a falling out with state-owned Qatar Petroleum, Handelsblatt learned from sources in the Kassel-based company.

Martin Bachmann, the board member responsible for the region, made no secret of his disappointment. "We have had close ties with Qatar for decades; it was not a decision we made lightly," he told The National, an English-language business newspaper for the Gulf region. "At this point, there is no reason for us to remain in the country."

The move comes just two years after Wintershall, together with its local partner, had discovered a large natural gas field off the coast of Qatar after five years of exploration in the region. The reserves are estimated at least 70 billion cubic meters, or 2.47 trillion cubic feet - enough natural gas to meet all of Germany's needs for an entire year.

Industry sources speculate that the surprising change of course is the result of the current frosty relations between the emirate and Germany. Martin Bachmann,, Wintershall Board Member

"During project planning, we and our partners were always aware of the fact that economic development of the discovery, including concentration and processing the natural gas, would only be possible if we received access to the local infrastructure," Mr. Bachmann told Handelsblatt. "But this access was not granted."

Although the field is large, the gas it contains is of relatively poor quality. This, say company insiders, is why it was agreed early in the process that the partners would build the offshore platform and the corresponding facilities off the coast, but would also be allowed to use the existing infrastructure on land.

This access, however, was recently denied. As such, the project would not be economical if the partners had to build the facilities themselves.

Wintershall declined to comment on the Qatar government's refusal to let it use existing infrastructure.

Industry sources speculate that the surprising change of course is the result of the current frosty relations between the emirate and Germany.

The Qatari government also declined to comment.

But it is known that the leadership is increasingly irritated over Germany's persistent criticism over awarding of the 2022 soccer Fifa World Cup. A provocative interview remark by German Minister of Economic Cooperation and Development Gerd Müller didn't help. "No one really plays soccer in Qatar," he said. "They go for walks with camels. What does that have to do with soccer?"

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The accusations of others that corruption played a role in the awarding of the World Cup and that Qatar provides funding to Islamist terrorists have triggered harsh criticism in the capital Doha. "We have zero tolerance for corruption, and these kinds of accusations are defamatory," said a senior diplomat who wished not to be named.

Qatar, the world's largest producer of liquefied natural gas, is also disappointed that Germany has not signed any major import agreements. Officials in Doha are said to view the relations between the two countries as "too one-sided."

German business representatives in the city say they have noticed a "loss of affection for Germany and a little disappointment."

An executive with strong business connections in Qatar has noticed the bad blood, but gives some of the blame to Wintershall as well. "The Qatari state-owned companies see business partners as business friends, and they also expect support from friends when it comes to their interests in Germany," said the manager who requested anonymity. "Some companies understand this, while others don't."

 

Jürgen Flauger covers the energy sector for Handelsblatt. Mathias Brüggmann is the head of Handelblatt's foreign desk. To contact the authors: [email protected], [email protected]