Shell to Quit Qatar Gas Project

Royal Dutch Shell is set to end its investment in a natural gas project in Qatar, according to a report by the Wall Street Journal.

The British oil major partnered with Qatar Petroleum and Chinese state-owned oil company PetroChina in 2010 in a move to share gas exploration and production in the North Field, off the coast of Qatar.

Shell's stake in the venture stands at 75%. The deal allowed Shell to drill two wells during a five-year period, set to end in May 2015.

Optimism over the viability of the fields has fallen, after Shell drilled a dry well in the North Field's Block D in 2014.

"Shell made it clear that the second well is not going to be commercially viable and they want to get out of the acreage by next year if not earlier," a Qatari official familiar with the matter told WSJ.

"[Shell's] talks with QP at the moment are over how to get out without drilling the second commitment well and QP is concerned about the damage Shell's exit could cause," the official added.

A Shell spokesman said the first exploration well had reached total depth as planned, but "it did not encounter commercial volumes of hydrocarbons". He said Shell is talking with PetroChina and QP about future plans, as cited by the WSJ.

Talk of Shell's withdrawal from the North Field project follows its exit from a joint venture exploring for gas in Saudi Arabia in early July.

Shell says it is the largest foreign investor in Qatar and has spent around $20bn building a liquefied natural gas plant in Ras Laffan, as well as the world's largest gas-to-liquids plant.