DOHA, 16 December 2004 — Qatar Petroleum and ExxonMobil signed yesterday finance and engineering agreements to move ahead with their $12 billion Qatargas 2 project which will export liquefied natural gas to Britain. Qatargas 2 is one of the world’s largest liquefied natural gas (LNG) export schemes. Yesterday’s deals flesh out an initial agreement for the project which was signed in 2002.
The new contracts include $7.6 billion finance arrangements, engineering deals to build two production units at Qatargas 2 as well as finance for an LNG import terminal which will be built at Milford Haven in south Wales.
Britain is to start importing LNG, gas cooled for transport by tanker, from next year as its North Sea gas supplies have started to dwindle. “The Qatargas 2 project is a major achievement that will provide the UK with a significant additional source of natural gas,” Qatar’s Energy Minister Abdullah ibn Hamad Al-Attiyah told a news conference.
Qatargas 2 is expected to start exporting LNG to the UK by the winter of 2007/2008. The two production trains at Qatargas 2, designed to produce 7.8 million tons a year each of LNG, are the largest in the world.
French oil field services group Technip and Japan’s Chiyoda were awarded the $4 billion contract to build the trains.
Under this contract, the joint-venture partners will engineer and build two trains at the Qatargas plant in Ras Laffan. The contract is double the $2 billion value estimated Monday by people familiar with the matter.
Technip and Chiyoda were competing against a consortium of Japan’s JGC Corp. and Halliburton Co. for the project known as Qatargas II.
Each LNG production train will produce an expected minimum of 7.8 million tons of LNG, with one train scheduled for start-up in late 2007, and a second starting about nine months later. The trains cool natural gas that can be exported in tankers. Technip said Qatargas will be selling LNG from these new trains into the UK.
A consortium including Britain’s BG is building an LNG import terminal, also at Milford Haven, to bring in gas from Egypt. Another plant being built in southeast England will import LNG from Algeria.
Qatargas 2 is a joint venture between state-run Qatar Petroleum with 70 percent and ExxonMobil which owns 30 percent.
Qatar, which owns the biggest gas deposit found to date — the North field — wants to be the world’s biggest LNG producer by the end of the decade.
Competition to import gas into Britain, Europe’s gas market, is hotting up.
