The cost of a joint venture between Qatar and Royal Dutch Shell to build the Qatargas 4 liquefied natural gas plant will be $8 billion, said the Gulf Arab state’s Energy Minister.
The cost is up on initial estimates of around $6 billion to $7 billion made by Qatari officials when the deal was first announced in 2005.
The plant is the last stage in Qatar’s existing plans to boost LNG capacity to 77 million tonnes by 2010, up from around 31 million tones now. Qatar is already the world’s largest exporter of LNG, which is gas chilled to a liquid state to make shipment possible on special tankers.
"The all-inclusive cost will be about $8 billion," Energy Minister Abdullah Al Attiyah told reporters in Arabic after a signing ceremony for the formation of the joint venture with Shell yesterday.
The plant was due to start up late in 2010, said Linda Cook, head of Shell’s gas and power division.
Cook said Shell’s 140,000 barrels per day Pearl gas-to-liquids fuel plant was going ahead as planned. Al Attiyah said last month that Pearl would start up by the end of 2009.
"So far so good," Cook said. "It’s a challenging project."
During the period 2007-2010, Shell will be investing more in Qatar than in any other country, Cook said.
Spiraling costs took the price tag estimate for the Pearl plant, which will be the world’s largest GTL facility, to $18 billion from an original budget of $5 billion.
Cost inflation led Qatar and ExxonMobil to scrap plans earlier this year to build another large GTL plant.
Despite this and technical problems at an existing GTL plant, Qatar remained committed to GTL as another way to diversify the use of its gas resources, Al Attiyah said yesterday.
"We do not want to put all our eggs in one basket," he said. "We have to create clean energy. This is another way to add value."
The Qatargas 4 project will produce around 1.4 billion cubic feet per day of gas from Qatar’s giant North Field, the largest pure gas reservoir in the world.
The gas will be liquefied at a plant with capacity to produce 7.8 million tonnes per year of LNG.
The project is 70 per cent owned by state oil and gas company Qatar Petroleum, while Shell holds the remaining 30 per cent.
UK firm signs 25-year deal with Nakilat
– The bulk of the LNG exports are destined for the east coast of the US, Qatargas said.
– Shell also signed a 25-year deal with Qatar Gas Transport Company (Nakilat) yesterday to provide shipping services to Nakilat’s newbuild fleet of 25 LNG tankers.
– Shell has arranged for capacity at the US Elba Island LNG terminal to receive the gas.- Qatar put new projects at the North Field on hold in April 2005 to study how the field was performing after rapid development.