QATAR CHOOSES SNAM TO MARKET LNG IN EUROPE

June 15, 1992
Qatar has chosen Italy's Snam SpA as its European partner to sell liquefied natural gas to Europe from a $4.8 billion joint venture project involving supergiant North offshore gas field. State owned Qatar General Petroleum Corp. (QGPC) and Snam signed an agreement in Doha to create a joint company owned 65% by QGPC and the remainder by Snam. Italy's state electricity monopoly, ENEL, which is seeking Qatari gas as fuel for its power plants, may later acquire part of Snam's interest

Qatar has chosen Italy's Snam SpA as its European partner to sell liquefied natural gas to Europe from a $4.8 billion joint venture project involving supergiant North offshore gas field.

State owned Qatar General Petroleum Corp. (QGPC) and Snam signed an agreement in Doha to create a joint company owned 65% by QGPC and the remainder by Snam. Italy's state electricity monopoly, ENEL, which is seeking Qatari gas as fuel for its power plants, may later acquire part of Snam's interest in the project.

The joint venture will transport and market North LNG to Europe. Exports to Europe by Snam via Italy, to begin in 1997, are expected to be 283 bcf/year at first and may climb to 459 bcf/year, depending upon demand.

Qatar last year let a $770 million contract to Italy's Condotte, part of the Iritecna Group, to build a harbor and LNG berths at Ras Laffan, site of the LNG terminal.

BACKGROUND

QGPC and foreign partners created Qatargas to oversee the massive North field development and LNG export project. QGPC holds a 70% interest in Qatargas, with remaining interests held 7.5% each by British Petroleum Co. plc, Total, Marubeni, and Mitsui. BP withdrew from the project, leaving the foreign partners with 10% each (OGJ, Jan. 20, p. 31).

Qatargas last month signed a final agreement with Japan's Chubu Electric Co. covering purchase of 141 bcf/year of LNG for 25 years beginning in 1997. Negotiations are under way with Tokyo Electric Power Co. and Kansai Electric Co. covering another 71 bcf/year of LNG.

The two train LNG complex will cost $2 billion and have an initial capacity of 141 bcf/year. The project also calls for construction of seven 125,000 cu m LNG tankers at a cost of $1.7 billion.

In addition, Pakistan tentatively approved a separate $3.5 billion project to import natural gas from Qatar through a 1,600 km pipeline from Doha to Karachi (OGJ, May 25, Newsletter).

Proved reserves in North field, formerly North Dome field and discovered by Royal/Dutch Shell Group in 1971 about 40 km off Qatar's northeast coast, are pegged at 63.6 tcf. Probable reserves are estimated at 150 tcf.

North production started up in 1991 under a $1.3 billion initial development project by a joint venture of Bechtel and Technip (OGJ, Sept. 2, 1991, Newsletter). Initial production goes to the domestic market.

Copyright 1992 Oil & Gas Journal. All Rights Reserved.