Following on the heels of similar news from ExxonMobil late last week, Qatar Shell GTL Ltd (Shell), a company of the Royal Dutch/Shell Group, said Monday that it has entered an agreement with Qatar Petroleum for the construction of the world’s largest Gas to Liquids (GTL) plant in Ras Laffan, Qatar.

Under the agreement, Shell plans to invest around $5 billion to develop upstream gas and liquids facilities and an onshore GTL plant that will produce 140,000 b/d of GTL products (primarily naphtha and transport fuels, with a smaller quantity of normal paraffins and lubricant base oils) as well as significant quantities of associated condensate and Liquefied Petroleum Gas.

The project will be developed in two phases with the first phase operational between 2008 and 2009, producing around 70,000 b/d of GTL products. The second phase will be completed less than two years later. The project includes the development of a block within Qatar’s vast North Field gas reserves, producing 1.6 Bcf/d of gas.

“The signing of the Heads of Agreement for this first world-scale project is an important milestone in establishing Qatar as the GTL capital of the world and is supporting the economic development of Qatar under the wise leadership of His Highness the Emir of the State of Qatar,” said Abdullah Bin Hamad Al-Attiyah, Second Deputy Prime Minister and Minister of Energy and Industry of Qatar on behalf of Qatar Petroleum. “We are looking forward to a long-term and mutually-beneficial relationship with Shell.”

Shell said GTL offers a commercially-attractive and environmentally-friendly way of bringing gas reserves to market. It is also expected to provide a major export opportunity for Qatar, producing clean fuels for markets across the globe.

Sir Philip Watts, chairman of the committee of managing directors of the Royal/Dutch Shell Group of Companies, said “We are grateful for the opportunity to participate in Qatar’s gas development and diversification plans. Shell offers the technology and operational experience to make this exciting project a reality. Not only are we building the largest GTL plant of its kind the world has ever seen, but we will be producing a new range of clean and versatile products which offer significant environmental and performance benefits. The project provides further evidence of Shell’s leadership in GTL technology, and provides Qatar with an attractive alternative to commercialise their enormous gas reserves.”

The news follows ExxonMobil’s announcement last week that it has inked an agreement with Qatar Petroleum in what is the largest U.S. liquefied natural gas (LNG) supply agreement signed to date (see Daily GPI, Oct. 17). The companies announced that they 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 ExxonMobil 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 both projects will come from Qatar’s North Field, which is one of the world’s largest natural gas accumulations, with reserves of over 900 Tcf.

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