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Tue 26 Jan 2010 09:54 PM

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Maersk to finish Shaheen oilfield project in 2010 Q1

Qatar limited output from field due to adherence to OPEC quotas.

Danish shipping and oil group AP Moller Maersk would complete the expansion of Qatar's al Shaheen oilfield during the first quarter of 2010, executives at the company said on Tuesday.

The $6.2 billion project initially aimed to boost capacity at the field to 525,000 barrels per day from around 240,000 bpd.

But Qatar has limited actual output from the field to 300,000 bpd due to its adherence to OPEC quotas, Maersk Oil Qatar's Deputy Managing Director Faisal al Thani said in a speech at an industry event in Doha.

Thani said: "We will complete the project in the first quarter of this year,"

He added: "Our output quota at Shaheen is 300,000 bpd."

Work on the largest offshore installations of the project was completed in the fourth quarter last year, Karsten Jensen, technical director of Maersk Oil in Qatar, told Reuters in an emailed statement on Tuesday.

All that remained was to link the platforms and pipelines and to test them, he said.

Jensen said: "Hook up and commissioning of all offshore facilities is expected to take place in early 2010."

Final capacity would only become clear when the project was finished, Thani said.

Qatar is one of OPEC's smallest members and its output is constrained by the group's production targets. OPEC made pledges to cut output by a record amount in 2008 to match a sharp fall in demand provoked by global economic slowdown.

The group has stuck to the limits since then, and the al Shaheen field has pumped below capacity.

Maersk cancelled an order for the floating storage and offloading vessel FSO Africa due to delays in delivery of the vessel, Thani said.

The cancellation would have no impact on the schedule for project completion at Shaheen, Jensen said.

He added: "The cancellation will not impact the project as we have alternative options in place which can be extended and expanded until more permanent solutions are in place."

The vessel is an oil tanker that a joint venture of Overseas Shipholding Group (OSG) and Euronav were converting to store oil produced at Shaheen and feed it into oil tankers for export.

OSG and Euronav have already delivered another vessel, the FSO Asia, to Maersk Oil Qatar. It has been operating at Shaheen since earlier this month.

Maersk signed the deal with Qatar to more than double output at the field in December 2005, with an initial investment estimate of $5 billion.

Qatar has planned building a 200,000 barrels per day refinery to process the additional oil produced from the field.

Shaheen pumps heavy oil that is tough to convert to transport fuels.

Qatar put the Shaheen refinery project on hold last year due to spiralling construction costs, but Oil Minister Abdullah al Attiyah said such projects may be revived now that construction costs have fallen.

Contractors globally have cut their costs for new energy projects after the downturn in the economy and the slump in oil prices forced many companies to cancel new oil and gas projects or put them on hold. (Reuters)

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MKH 10 years ago

My Advice to Qatar Petroleum company and Oil Minister Mr. Abdullah al Attiyah to start immediately Shaheen refinery project before construction companies boost up the construction costs as they plan to.