Coming as the largest U.S. liquefied natural gas (LNG) supply agreement signed to date, Exxon Mobil Corp. and Qatar Petroleum have entered into a $12 billion deal to bring LNG to the United States from Qatar for an expected 25-year period. ExxonMobil also said that it is examining four potential U.S. sites to build LNG import and regasification terminals.

Under the supply agreement, two large LNG trains will be developed by Ras Laffan Liquefied Natural Gas Co. Ltd. II (RasGas II), a joint venture between Qatar Petroleum and ExxonMobil since 2001. The combined capacity of the trains will be about 15.6 million tons per year of LNG, or about 2 Bcf/d. The feed gas for the trains will be sourced from Qatar’s giant North Field, which has proven natural gas reserves in excess of 900 Tcf.

The agreement stipulates that more than 26 Tcf of the reserves will be dedicated to this project. Downstream of the plants, the companies said the parties will be working to acquire necessary transportation capacity and developing regasification capacity in the United States. The $12 billion figure includes total estimated investment, including ships.

Speaking at a signing ceremony Thursday morning in Doha, Qatar, Harry Longwell, director and executive vice president of ExxonMobil, noted that the National Petroleum Council’s recent conclusion about domestic supply needs indicates that more gas must be imported to meet expected future demand. “This project will be a valuable contribution to those balances,” he said.

“This huge, world-scale project, with many technological firsts for the U.S. market, has been under consideration for more than one year,” he added. “The project demonstrates the impressive capabilities of the Qatar Petroleum-ExxonMobil partnership.”

The companies said there are several locations currently under evaluation for developing receiving terminals with the permitting process expected to be initiated in the fourth quarter of 2003. Delivery of LNG to the United States from this project is projected to begin in 2008 or 2009.

“We are looking at LNG terminal sites on the Gulf Coast, specifically two in Texas and one in Alabama, and we are also looking at a potential offshore Gulf of Mexico option,” said Bob Davis, ExxonMobil spokesman. He noted that the Sabine-Beaumont and Corpus Christi areas are being examined as sites in Texas, while Mobile has been highlighted in Alabama. Each proposed facility would be able to process a minimum of 1 Bcf/d of gas and cost $600 million, said Davis.

“Right now, we are in discussions for property purchases in Alabama and the Sabine-Beaumont area,” he said. “We already have a purchase option for a site in Corpus Christi.”

Davis said the company expects an 18- to 24-month permitting process on each terminal, followed by a three year construction process.

The LNG trains will be built at Ras Laffan Industrial City in Qatar by RasGas II. Two existing trains currently produce more than 6 million tons per year of LNG and two additional trains of 4.8 million tons per year are under construction. Qatar Petroleum will have a 70% equity interest in the project, and ExxonMobil will hold the remaining 30%.

“The strength of Qatar Petroleum and ExxonMobil establishes an ideal partnership to meet the challenge of supplying the growing energy requirements of the United States,” said Abdullah bin Hamad Al-Attiyah, Qatar second deputy premier and minister of energy and industry. “This long-term LNG supply agreement builds on Qatar’s valued and strong relationship with the U.S.”

Qatar’s Minister of Finance and RasGas Chairman Youssef Kamal added, “This is a giant step for RasGas and it promises the conclusion of the largest agreement since the company’s inception. It is undoubtedly a giant boost to our efforts to become an industry pace setter.”

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