DOHA, 17 October 2003 — State-run Qatar Petroleum signed yesterday a liquefied natural gas (LNG) deal worth $12 billion with US oil giant ExxonMobil and lined up a $4 billion project with Royal Dutch Shell.

The ventures are integral to Qatar’s all-out push to become the world’s biggest LNG exporter and a global energy giant.

The heads of agreement for a 25-year term with ExxonMobil is to supply the growing US domestic market and foresees LNG production of 15.6 million tons a year, or about two billion cubic feet (56.6 million cubic meters) per day from Qatar’s giant North Field.

“Total estimated investment including ships is about $12 billion,” a joint statement said.

Qatari Energy Minister Abdullah ibn Hamad Al-Attiyah, who is also chairman of Qatar Petroleum (QP), signed the deal expected to start up between 2008-2009 with ExxonMobil Corp. executive Vice President Harry J. Longwell at a Doha hotel, watched by journalists.

“The project is the largest LNG import project that has been announced for supplying gas to the US, and makes Qatar Petroleum and ExxonMobil leaders in supplying the important US natural gas market,” the statement said. “Delivery of LNG to the US is targeted to begin in 2008 2009 and will extend for over 25 years. Several locations are currently under evaluation for developing a receiving terminal and permitting process will be initiated in the fourth quarter of 2003.”

Exxon and QP in partnership are to set up RasGas-3 - two trains of 7.8 million tons per year each - owned 70 percent by QP and 30 percent by Exxon. The LNG trains will be built at Qatar’s Ras Laffan Industrial City by RasGas (II), a joint venture company between Qatar Petroleum and ExxonMobil that has been operating since 2001.

“This long-term LNG supply agreement builds on Qatar’s valued and strong relationship with the US,” said Attiyah. Finance Minister and RasGas Chairman Yusef Kamal noted that RasGas’s largest deal was “undoubtedly a giant boost to our efforts to become an industry pace setter.”

“This is a huge, world-scale project with many technological firsts for the US market which has been under consideration for over a year,” said Longwell.

Qatar is set to be the world’s biggest exporter of LNG by 2010 with an annual output of 30 million tons and is pushing to take production to 45 million tons a year.

Doha and foreign partners have already pumped $15 billion of LNG ventures into the North Field, the world’s largest non-associated gas field. It has proven reserves of over 900 trillion cubic feet (tcf), or 25.485 trillion cubic meters. That is more than 15 percent of the total proven global gas reserves, and enough to last the tiny Gulf state about 250 years.

Over 26 tcf of the reserves will be dedicated to the Exxon-QP project.

With Qatar pursuing huge development programs, Royal Dutch Shell is expected to unveil ambitious plans on Monday to build a huge plant in the Gulf desert emirate to convert natural gas into liquid fuels.

The $4 billion agreement envisages the construction of a vast gas-to-liquid (GTL) plant in Qatar to produce naptha and environmentally friendly diesel fuels.

“We are still negotiating and we hope to conclude a deal. We are not going to give a time scale,” a Shell spokesman in London told AFP when asked about the deal, confirming the outlines of the plan but refusing to elaborate.

Qatar Energy Ministry official Ali Abdul Ghani said the deal would be agreed in principle on Monday and finalized in the second half of 2004. A letter intent was signed last year.

According to sources close to the deal, the new plant would aim to produce around 137,000 barrels per day of liquefied fuel.

GTL technology is relatively untested, but energy companies are hopeful that the new fuels it produces could become increasingly popular as demand grows for less polluting diesel vehicle engines.

Taiwan’s Chinese Petroleum Corp. (CPC) is finalizing a deal to purchase three million tons per annum of LNG for 25 years from Rasgas after signing a heads of agreement last March.

RasGas is owned by Qatar Petroleum, which holds 63 percent of the outfit, with ExxonMobil holding 25 percent, and the remainder held by Japanese and South Korean companies. Qatar today exports about 15 million tons of LNG a year, mainly to Japan and South Korea.

OPEC producer Qatar also has recoverable oil reserves of 15.2 billion barrels — or 1.4 percent of the world’s total reserves.

Qatar, which has a population of about 650,000 — most of them expatriates — exports nearly all its oil production to Asia.