Maersk Could Lose Qatar field, its Largest Oil Asset

Denmark's A.P. Moller-Maersk said for the first time on Wednesday there was a risk it could lose its largest oil producer, a 300,000 barrel per day Qatari field, and may not replace the production by buying other assets.

Chief Executive Nils Smedegaard Andersen's comments give some insight into Maersk's view of how the oil industry will evolve, after oil prices more than halved in the past two years.

The recently-streamlined conglomerate still considers Maersk Oil as core to its business and for years the expectation was that the Qatar field would be part of this as Maersk would renew a 25-year production agreement when its licence ran out in 2017.

But the Gulf state surprised the company last year by putting out a tender for the Al Shaheen field, which Maersk Oil has been operating since 1992.

"On Qatar, yes, we are in a tender process. That means, that there is a risk that we will lose Qatar but we don't feel that that should induce us to go out and do something dramatic on the M&A activity to replace volumes," Andersen told investors.

Last year, Andersen was more upbeat about the tender process, saying Maersk had a good chance of winning it. He has also said Maersk would be interested in buying other oil assets because they have become so cheap due to falling crude prices.

His latest comments came after the company said its Maersk Line shipping unit had returned to profit in the first quarter, surprising most analysts who had expected a loss.

Andersen has overseen a streamlining of the sprawling conglomerate and has said Maersk would focus on shipping, port operations and oil and oil services.

Maersk Oil's entitlement production from the Al Shaheen field was 164,000 bpd in the first quarter of this year, almost half of the company's total entitlement production of 350,000 bpd and by far the largest contributor to its portfolio.

Maersk last year scrapped a target for the oil unit to increase entitlement production to 400,000 bpd in the coming years and slashed exploration spending due to low oil prices.

In some years, Maersk Oil has contributed a third to half of group profits, though that dropped when oil prices fell.

A Qatari oil source told Reuters the Gulf state had invited international majors to the tender because it wanted to raise production at the field to 500,000 bpd. The source said Exxon Mobil (XOM) and Royal Dutch Shell (RYDAF) were already long-standing partners. Total has also been invited to tender.

Maersk Oil had originally planned for Al Shaheen's production to reach 525,000 bpd by 2010, after a 2005 field development plan was approved, but output remained at about 300,000 bpd. The oil reservoirs are notoriously thin and spread out across a vast area, making production difficult.

By Sabina Zawadzki