Regional LNG: ExxonMobil , Qatar Petroleum sign $12 billion LNG deal

US oil giant Exxon Mobil Corporation announced on Thursday it had signed Heads of Agreement (HoA) with Qatar Petroleum to supply Liquefied Natural Gas (LNG) from Qatar to the United States for an expected period of 25 years.

The HoA covers the development of two large LNG trains with combined capacity of 15.6 million tons per annum (MTA) of LNG, or about 2 billion cubic feet per day, by Ras Laffan Liquefied Natural Gas Company Limited II (RasGas II).

The feed gas for these trains will be sourced from Qatar's giant North Field, which has proven natural gas reserves in excess of 900 TCF. More than 26 TCF of the reserve will be dedicated to this project. Downstream of the plants the parties will be working to acquire necessary transportation capacity and developing regasification capacity in the United States. Total estimated investment including ships is about $12 billion.

The project is the largest LNG import project that has been announced for supplying natural gas to the United States, and makes Qatar Petroleum and ExxonMobil leaders in supplying the important U.S. natural gas market. Delivery of LNG to the United States is projected to begin in 2008/2009, and will likely extend for more than 25 years. Several locations are currently under evaluation for developing a receiving terminal, and we expect the permitting process will be initiated in the fourth quarter of 2003.

The LNG trains will be built at Ras Laffan Industrial City in Qatar by RasGas II, a joint venture between Qatar Petroleum and ExxonMobil, that has been operating since 2001. Two existing trains currently produce more than 6 mta of LNG and two additional trains of 4.8 mta each are under construction. Qatar Petroleum will have a 70 percent equity interest in the project, and ExxonMobil 30 percent. (alex)