Royal Dutch Shell has signed a 25-year service agreement with Qatari officials that gives the oil major access to all of the liquefied natural gas (LNG) from a new project set to supply eastern U.S. markets by the end of the decade.

The $8 billion Qatargas 4 liquefaction project, 70% owned by Qatar and 30% by Shell, will produce about 1.4 Bcf/d of gas, including 24,000 b/d of liquefied petroleum gas and 46,000 b/d of condensate, from Qatar’s North Field over the life of the project. The facility includes a 7.8 million tons/year liquefaction plant and concomitant LNG shipping capabilities.

Linda Cook, CEO of Shell Gas and Power, signed the service agreements last week in Doha, Qatar, with Qatari Energy Minister Abdullah al-Attiyah and Qatargas Operating Co. CEO Faisal Bin Mohammed Al Suwaidi.

“Today’s event marks the conclusion of all major commercial agreements for the Qatargas 4 project,” said al-Attiyah. “This impressive undertaking will further cement Qatar’s position as the world’s leading producer of LNG and help us meet our production target of 77 million tons/year.”

Shell said the first LNG cargoes are scheduled for delivery “around the end of the decade.” Most of the cargoes are destined for eastern U.S. markets using the Elba Island LNG import terminal. Shell has arranged for capacity at Elba Island and the new Elba Express natural gas pipeline to receive and regasify the LNG imports.

Under a second agreement, Shell will manage a fleet of 25 Qatari LNG carriers for Qatar Gas Transport Co., or Nakilat. Shell will provide staff, training and operational management for the contract period, with operational management shifting to Nakilat within 12 years of delivery of the last LNG vessel.

Qatar, which holds the third-largest gas reserves in the world after Russia and Iran, has several LNG projects under way with oil majors that include Shell, ConocoPhillips and ExxonMobil Corp. The Qatargas 3 and Qatargas 4 projects were announced in December 2005, and construction began last year (see NGI, April 10, 2006). When the Qatargas 4 project was announced in 2005, officials estimated the cost at $6-7 billion.

According to Shell, a new fleet of LNG vessels is under construction and will be put into service over the next four years. The fleet is being designed to carry LNG supplies from four Qatari projects: Qatargas 2, Qatargas 3, Qatargas 4 and RasGas 3.

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