- Title: QATAR: Qatar, Shell LNG project cost rises to $8 billion
- Date: 12th July 2007
- Summary: (MER2) DOHA, QATAR (JULY 11, 2007) (REUTERS) PEOPLE WAITING FOR THE CEREMONY TO START EMPTY PODIUM AND EVENT SIGNBOARD
- Embargoed: 27th July 2007 13:00
- Keywords:
- Location: Qatar
- Country: Qatar
- Topics: Economic News,Energy
- Reuters ID: LVAPPOTVKOM2J1IER7HVL05AYDY
- Story Text: Qatargas signs an agreement with Shell for the "Qatargas 4" project, which involves building the company's seventh liquefied natural gas (LNG) train with a production capacity of 7.8 million tonnes a year, to be exported to the U.S. and Europe in nine large ships, that will also be built. The cost of a joint venture between Qatar and Royal Dutch Shell <RDSa.L> to build the Qatargas 4 liquefied natural gas plant will be $8 billion, the Gulf Arab state's Energy Minister said on Wednesday (July 11).
The cost is up on initial estimates of around $6 billion to $7 billion made by Qatari officials when the deal was first announced in 2005.
The plant is the last stage in Qatar's existing plans to boost LNG capacity to 77 million tonnes by 2010, up from around 31 million tonnes now. Qatar is already the world's largest exporter of LNG, which is gas chilled to a liquid state to make shipment possible on special tankers.
"We created a very nice gas basket in Qatar I think. We have LNG, we have LPG, we have pipeline, we have petrochemicals. This is our way to create added value and to divide our risk and to create a very good basket that contains all the aspects" Energy Minister Abdullah al-Attiyah said during a signing ceremony for the formation of the joint venture with Shell on Wednesday.
The plant was due to start up late in 2010, Attiyah said.
Shell's 140,000 barrels per day Pearl gas-to-liquids fuel plant was going ahead as planned, said Linda Cook, head of Shell's gas and power division. Attiyah said last month that Pearl would start up by the end of 2009. "We are delighted to be part of Qatargas 4 project, which will be SHELL's 7th LNG project, but I think importantly, it will be the project that takes Qatar to his Excellency's vision of 77 million tons per anum, so being the largest LNG producer in the world. So, we are excited to have a part in reaching that goal,'' said Cook.
During the period 2007-2010, Shell will be investing more in Qatar than in any other country, Cook said.
Spiralling costs took the price tag estimate for the Pearl plant, which will be the world's largest GTL facility, to $18 billion from an original budget of $5 billion.
Cost inflation led Qatar and Exxon Mobil <XOM.N> to scrap plans earlier this year to build another large GTL plant.
Despite this and technical problems at an existing GTL plant, Qatar remained committed to GTL as another way to diversify the use of its gas resources, Attiyah said.
The Qatargas 4 project will produce around 1.4 billion cubic feet per day of gas from Qatar's giant North Field, the largest pure gas reservoir in the world.
The gas will be liquefied at a plant with capacity to produce 7.8 million tonnes per year of LNG.
The bulk of the LNG exports are destined for the east coast of the United States, Qatargas said in a statement on Wednesday. Shell has arranged for capacity at the U.S. Elba Island LNG terminal to receive the gas.
It will also produce around 24,000 barrels per day of propane and butane, and 46,000 bpd of oil condensates.
The project is 70 percent owned by state oil and gas company Qatar Petroleum, while Shell holds the remaining 30 percent.
Shell also signed a 25-year deal with Qatar Gas Transport Company <QGTS.QA> (Nakilat) on Wednesday to provide shipping services to Nakilat's newbuild fleet of 25 LNG tankers.
Qatar put new projects at the North Field on hold in April 2005 to study how the field was performing after rapid development. - Copyright Holder: REUTERS
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