- The Washington Times - Sunday, February 27, 2005

DUBAI, United Arab Emirates (AP) — Qatar’s state-run petroleum company and two major international oil companies signed deals yesterday worth a total of about $19 billion to develop liquefied natural gas for European and American markets.

Qatar Petroleum and Exxon Mobil Corp. announced the start of a $12.8 billion project that aims to ferry liquefied natural gas to Britain for the next 25 years.

Qatar Petroleum officials dubbed the Exxon Mobil deal the world’s largest-ever liquefied natural gas development effort and largest energy financing, involving $7.6 billion in investments from 57 institutions, including Islamic banks.

Separately, Exxon Mobil’s European rival, Royal Dutch-Shell Group of Companies, said it signed an agreement with Qatar Petroleum to build a plant in Qatar’s Ras Laffan City that is expected to produce 7.8 million tons of liquefied natural gas over 25 years, with deliveries to American and European markets starting in 2010.

Shell has a 30 percent stake in the project, named Qatargas 4. Qatar Petroleum holds the remaining 70 percent interest in the $6 billion venture.

The tiny nation of Qatar, which sits atop one of the largest reserves of natural gas, stands to be the world’s top seller of liquefied gas — and one of its wealthiest countries — shortly after decade’s end.

Meanwhile, Qatari Oil Minister Abdullah bin Hamad al-Attiyah said yesterday the Organization of Petroleum Exporting Countries (OPEC) would stick to its current production ceiling of 27 million barrels a day when it meets in Isfahan, Iran, March 16.

“We will study the market supply and demand, but I don’t think there will be [a production] cut,” the minister said. “There will be a rollover of the output ceiling.”

In the long term, the growing shipments of liquefied natural gas are “absolutely crucial” in helping gas replace oil as a fuel in heating and electrical power plants, said Youssef M. Ibrahim, director of Dubai-based Strategic Energy Investment Group.

Oil prices have hovered at record levels beyond $50 per barrel, and analysts said cheaper gas fuel is more desirable for its cleaner-burning qualities.

“It will make Qatar, on a per-capita basis, probably the richest country on the Earth,” Mr. Ibrahim said.

Britain will be the chief market for the liquefied gas in the Exxon Mobil venture announced yesterday, receiving 17.2 million tons of liquefied natural gas per year, for 25 years. The first shipment is expected to arrive by late 2007, Qatar Petroleum said.

Qatar Petroleum owns 70 percent of the joint venture, named Qatargas II, with Irving, Texas-based Exxon Mobil holding as much as 30 percent.

Production and transport of liquefied natural gas is a complex and expensive process, requiring sophisticated shipping and receiving infrastructure.

The gas must be cooled to minus 260 degrees Fahrenheit, which allows it to be compressed and transported aboard oceangoing tankers. Once it arrives, the supercooled fuel must be warmed to a gaseous state before being pumped into delivery pipelines.

Qatargas II will further commercialize the huge Qatar North Field, which cradles 900 trillion cubic feet of natural gas, about 10 percent of the world’s proven total. Qatar Petroleum was expected to announce further joint ventures for liquefying and transporting more of its gas.

“The gas bubble is finally being exploited,” Mr. Ibrahim said.

“These are huge incremental volumes. As the facilities are completed one after another, you’ll see an exponential increase in the volumes that are shipped out.”

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