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Qatargas 3 LNG Project Given Final Green Light

A final engineering, procurement and construction (EPC) agreement was announced for the Qatargas 3 liquefaction project, which will bring significant liquefied natural gas (LNG) supply to the United States. The EPC contract marks the final investment decision for the project, which will begin supplying LNG to the U.S. in 2009.

ConocoPhillips (30%) and Qatar Petroleum (70%), the partners in Qatargas 3, awarded the EPC contract to Japan's Chiyoda Corp. and the Technip France Joint Venture (CTJV). The liquefaction project will be located where all of Qatar's many existing and proposed LNG production facilities are based, Ras Laffan Industrial City, and will tap production from Qatar's giant North Field, which is estimated to contain 900 Tcf of gas.

In order to capture synergies, Qatargas 3 will execute the development of the onshore and offshore assets as a single integrated project with Qatargas 4, a joint venture between Qatar Petroleum and Royal Dutch Shell plc. This includes the joint development of offshore facilities situated in a common offshore block in the North Field, producing 2.8 Bcf/d of gas and a substantial quantity of associated liquefied petroleum gas (LPG) and condensate, the construction of two identical LNG processing trains, and associated gas treating facilities for both the Qatargas 3 and Qatargas 4 Joint Ventures. Qatargas 4 is expected to be completed at the end of 2010.

"Today's event marks the launch of the large scale Qatargas 3 and Qatargas 4 LNG projects, which [are] the final [steps] for Qatar on its road to become the world's leading producer of LNG with 77 million tons per annum by 2010," said Abdullah bin Hamad Al-Attiyah, minister of energy and industry of Qatar.

The EPC contract with CTJV for Qatargas 3 covers the onshore LNG train, with a nameplate capacity of 7.8 million metric tons per year, and includes upstream gas production facilities that will produce 1.4 Bcf/d of natural gas and 70,000 bbl/d of LPG and condensate over the 25-year life of the project. The LNG will be shipped from Qatar in a fleet of large LNG carriers, destined for sale primarily in the United States.

Qatargas 3 has received commitments for over $2.8 billion from 26 commercial banks, the Export Import Bank of the United States (Ex-Im) and Japan Bank for International Cooperation (JBIC). Ex-Im approved a loan guarantee last week for up to $403.5 million to support the project.

Under this contract, the Technip/Chiyoda joint venture will carry out the engineering, procurement and construction of Trains 6 and 7 at the Qatargas plant in Ras Laffan Industrial City, adjacent to Trains 4 and 5 currently being executed by the Technip/Chiyoda joint venture within the framework of the contract signed with Qatargas 2. Each train is designed to produce 7.8 million metric tons of LNG per year.

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