VENEZUELAN LNG BACK ON TRACK; MOBIL HIKES STAKE IN QATAR LNG

Two big liquefied natural gas projects are showing progress.

Venezuela's $3 billion LNG export project is stirring again, and Mobil Corp. has wrapped up the details in a deal to acquire a 10% interest in Qatar Liquefied Gas Co. (Qatargas) and an associated offshore field development project.

CRISTOBAL COLON LNG

Venezuela's stalled LNG project is again moving ahead since partners have settled a dispute over protection of technology.

So said Lagoven SA, the unit of state petroleum company Petroleos de Venezuela SA that is Venezuela's partner with a 33% interest in the project along with units of Royal Dutch/Shell Group 30%, Exxon Corp. 29%, and Mitsubishi Corp. 8%.

The Cristobal Colon LNG project, stalled in talks since 1990, calls for developing gas fields in the Gulf of Paria off eastern Venezuela and exporting the gas as LNG to the U.S. and Europe.

It includes offshore production facilities, a subsea pipeline to shore, port facilities, and a liquefaction plant with capacity of 4.6 million metric tons/year. Construction time is estimated at 6 years.

Lagoven Pres. Julius Trinkunas said a problem developed when Shell, group leader on project technology, expressed concern over the confidentiality of certain of its technology related to the liquefaction process to be used, notably because of competitor Exxon's participation in the project.

The problem was resolved, Trinkunas said, when the partners accepted confidentiality agreements under which certain individuals may have access to technical details of the liquefaction process in order to carry out the project. He noted Lagoven will have unrestricted access to technology to be used in the project.

Concerns over the outlook for natural gas prices, another project stumbling block, also have been allayed, another Lagoven official said. The partners believe the long term outlook for LNG prices in the U.S. and Europe make profit projections attractive.

To date, Lagoven has spent $205 million for exploration as well as other preliminary work and studies related to the project. Lagoven will be credited this amount as part of its capital investment commitment, Trinkunas said.

The partners hope to hammer out an agreement this year that can be submitted to Venezuela's congress for approval required under the hydrocarbon nationalization law of 1975.

MOBIL JOINS QATARGAS

Mobil wrapped up its 10% interest in Qatargas Jan. 31 in an agreement with Qatar General Petroleum Corp. (QGPC).

Qatargas aims to develop gas reserves in giant North field off Qatar. The agreement spells out the final structure of the $4-5 billion development project.

The upstream part of the project is structured as a production sharing agreement with interests split among QGPC 65%, Total 20%, Mobil 10%, and Mitsui & Co. and Marubeni 2.5% each.

For the downstream part of the project, QGPC holds 65%, Total 10%, Mobil 10%, and Mitsui and Marubeni 7.5% each.

Qatargas is operator for the overall project. A management team has been set up that puts Total in charge of upstream operations and Mobil in charge of the liquefaction plant.

Qatargas has an agreement with Chubu Electric Co. calling for Chubu to buy 4 million metric tons/year of LNG for 25 years starting in 1997 with the option to increase its purchase to 6 million tons/year.

Basic engineering for the LNG unit is being completed, and Total has started basic engineering for the upstream project.

LNG production is to begin in January 1997.

Qatargas marks the second agreement between Mobil and QGPC to develop North field reserves.

Korea Gas has signed a letter of intent to buy at least 2.4 million tons/year of LNG from QGPC and Mobil's Ras Laffan Liquefied Natural Gas Co. Ltd., formed late last year to develop as much as 10 million tons/year of LNG from North field (OGJ, Jan. 4, p. 28). QGPC holds a 70% interest in that venture and Mobil 30%.