QP and Exxon drop US$18bn gas project

Qatar Petroleum and Exxon Mobil Corp have dropped plans to build a gas-to-liquids plant in Qatar due to spiralling costs and will instead turn their attention to developing part of the country’s huge North Field gas reserves.
QP and Exxon drop US$18bn gas project
By Arabian Business Staff
Sun 25 Feb 2007 12:00 AM

Qatar Petroleum and Exxon Mobil Corp have dropped plans to build a gas-to-liquids plant in Qatar due to spiralling costs and will instead turn their attention to developing part of the country’s huge North Field gas reserves.

Qatar energy Minister Abdullah al-Attiyah said other projects in Qatar were not under threat and ground was broken last Thursday on a multi-billion-dollar GTL plant with Royal Dutch Shell. Costs for that facility, which processes gas into refined products that are market-ready, have risen to as much as US$18bn from a previous 2003 estimate of around US$5bn.

The Exxon/QP GTL scheme, signed in 2004, had an initial budget of US$7bn.

Exxon executives in Qatar and a spokeswoman in the US declined to say how high costs had risen for the plant that was to have churned out 154,000 barrels per day. “GTL technology is expensive and very technical,” Attiyah said. “Technology for the other projects is proven...no other projects are under threat.”

QP has offered Exxon a role in the development of the Barzan gas field, part of Qatar’s North Field — the largest reservoir of non-associated gas in the world. QP also offered Exxon rights to participate in any future development at Barzan.

Attiyah said it was too early to estimate the development cost of Barzan, which will pump 1.5 billion cubic feet per day of gas from 2012 to meet the huge demand from the country’s rapidly growing domestic energy market.

Exxon’s Qatar country manager Alex Dodds said the Barzan cost would be similar to the company’s al-Khaleej gas project, also at the North Field.

He did not say whether he was referring to the first stage of the project, however, which cost US$1.1bn, or the more expensive US$3bn second phase.

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