In just three months since final agreements were put in place (see Daily GPI, Dec. 22, 2005), Qatar Petroleum, ConocoPhillips and Royal Dutch Shell plc were on hand Monday for the groundbreaking on Qatargas 3 and Qatargas 4, two of the world's largest liquefied natural gas (LNG) development projects, which are located in Qatar.
H.H. Sheikh Tamim Bin Hamad Al-Thani, heir apparent of the State of Qatar, laid the foundation stone for the projects on Monday in a ceremony held at Ras Laffan Industrial City. Combined, the projects are expected to provide 2.8 Bcf/d of natural gas, the majority of which is targeted for delivery to the United States.
Moving along at record pace, all of the necessary resources to carry out the projects are now in place, Qatar Petroleum said. In order to capture "substantial synergies," the projects jointly are executing the development of the onshore and offshore assets to enable them to be operated as a single integrated venture.
"Qatargas is supplying to Asia and will reach Europe by end of 2007 and the North American market by end of 2008," said Qatargas CEO Faisal M. Al Suwaidi. "Therefore our marketing will cover every corner of the world and in turn we will realize our vision to be the world's leading supplier of LNG by the end of the decade."
In December, both Qatargas 3 and Qatargas 4 announced their final investment decisions and awarded the onshore Engineering, Procurement and Construction (EPC) contract to the Chiyoda Corp. and Technip France Joint Venture. The EPC contract with Technip covers the engineering, procurement, and construction of onshore facilities for two large-scale LNG trains, each with a nameplate capacity of 7.8 million tons/year. The total price of this contract is valued around US$4 billion.
Qatargas 3 has received commitments for more than $2.8 billion from 26 commercial banks, the Export Import Bank of the United States and Japan Bank for International Cooperation (JBIC). Qatar Petroleum said commercial agreements and financing for Qatargas 4 are advancing rapidly.
Qatargas 3 is an integrated project, jointly owned by Qatar Petroleum (68.5%), ConocoPhillips (30%) and Mitsui (1.5%). Qatargas 4 will be implemented through a joint venture between Qatar Petroleum (70%) and Shell (30%). Each project comprises upstream gas production facilities to produce 1.4 Bcf/d of natural gas, plus an average of 70,000 bbl/d of liquefied petroleum gas (LPG) and condensate from Qatar's North Field over the 25-year life of the project. The first LNG cargoes from Qatargas 3 are expected to be delivered in 2009. First LNG cargoes from Qatargas 4 are scheduled for around the end of the decade.
Qatar Petroleum said access to growing U.S. natural gas markets is "the key element" in both the Qatargas 3 and Qatargas 4 LNG marketing strategies. The sponsors of Qatargas 3 and Qatargas 4 have put strong emphasis on the development of infrastructure and capacity to bring LNG to these markets. Qatargas 4 volumes are intended to flow into natural gas markets in the eastern U.S. For this purpose, Shell, as a sponsor of Qatargas 4, has entered into agreements with Southern LNG Inc. and Elba Express Pipeline Co. LLC. to acquire additional capacity at the Elba Island LNG import terminal as well as in a new natural gas pipeline (see Daily GPI, Dec. 22, 2005). Both projects will be filed with the U.S. Federal Energy Regulatory Commission (FERC) for approval in the third quarter of 2006.
In December 2005, Qatargas 3 executed a sales and purchase agreement with ConocoPhillips for the full train output, which will be marketed primarily in the U.S.
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