Reports indicate that oil major Exxon Mobil and Qatar are in talks with a view to pursuing a deal that would see the Middle East country invest in the shale gas resources of the oil major located in the United States. According to sources this might involve Qatar Petroleum, a state-owned firm, forming a partnership or making investments in wells that Exxon will drill in the future. This comes in the wake of a planned meeting between U.S. President Donald Trump and the Emir of Qatar, Sheikh Tamim bin Hamada al-Thani.
If the deal comes to fruition, this will be the first instance in which a country from the Middle East made heavy investments in a shale project in the United States. This would not be the first time Exxon Mobil would be partnering with Qatar Petroleum though as the two are already partner in projects in Brazil and Cyprus. Additionally Qatar Petroleum holds the biggest stake in Texas’ Golden Pass LNG terminal while Exxon has a smaller stake.
The United States’ shale revolution has not only led to a big increase in the production of crude but has also raised the natural gas output. At the moment Exxon Mobil is the second-largest producer of natural gas in the United States. Earlier in the year Exxon indicated that it was planning to triple the production capacity in New Mexico and West Texas’ Permian Basin to barrels of oil numbering 600,000 on a daily basis by 2025.
From the partnership Qatar stands to gain by diversifying its investments outside the Middle East. Currently the tiny resource-rich country is in a diplomatic dispute its Arab neighbors that include Egypt, Bahrain, United Arab Emirates and Saudi Arabia.
World’s biggest LNG supplier
Among the members of the Organization of the Petroleum Exporting Countries, Qatar ranks as one of the smallest. The country however highly influential with regards to the worldwide liquefied natural gas market owing to its yearly production of 77 million tons which makes it the largest supplier of LNG in the world.
This comes in the wake of Bank of America Merrill Lynch assigning the stock of Exxon Mobil a buy rating citing the financial strength and strong cash flow of the oil major.
“Unlike CVX and its European super major peers, Exxon Mobil’s cash flow covers dividends and a projected capital spending that underpins a growth outlook that is unprecedented amongst the large cap US oils,” Doug Leggate, a Bank of America Merrill Lynch analyst, wrotein a client note.