By Massoud Derhally
Occidental Petroleum Corporation was selected by the UAE Offsets Group as the successful bidder for a 24.5 percent interest in the Dolphin Project and Dolphin Energy Limited
Occidental Petroleum Corporation was selected by the UAE Offsets Group as the successful bidder for a 24.5 percent interest in the Dolphin Project and Dolphin Energy Limited (DEL), a partnership that includes the Offsets Group (51 percent interest) and TotalFinaElf (24.5 percent interest). Occidental and Offsets expect to complete a definitive agreement by June 1. The DEL partners will collaborate on the $3.5 billion Dolphin Project which consists of two parts 3/4 (1) a development and production sharing agreement with Qatar to develop and produce natural gas and condensate in Qatar's North Field and (2) the rights for DEL to build, own and operate a 260-mile-long, 48-inch export pipeline to transport 2 billion cubic feet per day of dry natural gas from Qatar to markets in the UAE for a period of 25 years. Dr. Ray R. Irani, Occidental's chairman and chief executive officer, said: "We are pleased to have been selected as a partner in one of the premier energy projects in the Middle East. We look forward to a long and mutually beneficial association with the United Arab Emirates and the opening of a new phase in our strong relationship with Qatar. Dolphin is more than a project. It is the foundation of a business enterprise that expects to pursue additional investment opportunities in the region." "When Dolphin becomes fully operational," Dr. Irani said, "this project will add incremental daily production of about 125 million cubic feet of natural gas and 9,000 barrels of liquids net to Oxy 3/4 equal to approximately 30,000 barrels of oil equivalent per day. The partners anticipate securing project financing which will limit Oxy's net cash exposure at any point during the project. This is a very attractive project in view of the large volume of proven reserves in Qatar's North Field, the support of both the UAE and Qatar Governments and the growing demand for both power and water in the UAE that ensures an excellent long-term market for Dolphin gas." "The project will result in the addition to our proven reserve base of approximately 900 billion cubic feet of gas equivalent which is equal to 150 million equivalent barrels of oil," Dr. Irani added. Production is scheduled to begin in late 2005. The project is already under way, with ongoing development drilling in the North Field and engineering studies for both the upstream and pipeline segments in progress. Construction on the upstream production and processing facilities and the pipeline is expected to begin in 2003. Pipeline deliveries can be expanded to a total of 3.2 billion cubic feet per day at a later date, as additional gas supplies become available. Statements in this presentation that contain words such as "will" or "expect," or otherwise relate to the future, are forward-looking and involve risks and uncertainties that could significantly affect expected results. Factors that could cause results to differ materially include, but are not limited to: global commodity pricing fluctuations, and supply/demand considerations, for oil, gas and chemicals; higher-than-expected costs; and not successfully completing (or any material delay in) any expansion, capital expenditure, acquisition, or disposition. Occidental disclaims any obligation to update any forward-looking statements.