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Gulf Times (Qatar): Talks still on with Total and Shell on LNG stake

Apr 3rd, 2006
by admin.

Publish Date: Monday,3 April, 2006, at 10:30 AM Doha Time
RAS LAFFAN: Qatar has still not finalised agreements with Total and Royal Dutch/Shell for equity stakes in two liquefied natural gas (LNG) trains in the Gulf state, Qatargas said yesterday.
CEO Faisal al-Suwaidi said negotiations were in the final stage with Total for the Qatargas 2 project’s second train, which is expected to produce 5mn tonnes a year.
“Hopefully, Total will join us soon in the train. It will take anything between 15-20%,” he told reporters.
State-run Qatar Petroleum has a 70% stake in Qatargas 2 while ExxonMobil holds 30%. The project will develop two LNG trains – trains 4 and 5 – to supply 15mn tonnes a year to Britain and North Europe for 25 years.
Al-Suwaidi said talks were still going on with Shell to finalise an agreement for Qatargas 4, a 7.8mn tonne a year project with one train to supply North America and Europe.
“We are still in the final stages of a development agreement with Shell. This has to happen before the third quarter, otherwise we cannot finance the project,” he said.
“We are (also) in negotiations with a Japanese trading house (to take a stake in Qatargas 4), but they really need to show value,” Suwaidi said without naming the Japanese company.
In February 2005, QP and Shell signed an agreement for the development of Qatargas 4, in which QP would hold a 70% interest. The project, which will own train 7, is expected to cost between $6 and $7bn with LNG deliveries in 2010.
Al-Suwaidi was speaking after a ground-breaking ceremony for the Qatargas 3 and Qatargas 4 projects.
Asked whether he saw a spot market emerging for LNG, Suwaidi said: “I don’t think there is eagerness on the side of producers or buyers … I think we are years away from that.”
He said Qatargas has introduced the right of diversion – diverting LNG cargoes to different buyers – but said the firm was committed to meeting its customers’ needs.
“If I look at the total system, there’ll be limited diversion,” he said, adding that diversions would address seasonal shifts in demand and economic benefit. – Reuters

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