Speaking from Doha in Qatar at the award of the Engineering, Procurement and Construction (EPC) contract for the Qatargas 4 project, Linda Cook, Shell Executive Director of Gas and Power said, "We are honoured to join Qatar Petroleum in partnership for the Qatargas 4 LNG venture. The project will contribute to Shell's goal of growing our natural gas production and reserves position, as well as to increased security and diversity of natural gas supply to North America."
Qatargas 4 is Shell's seventh global LNG supply project and reaffirms the company's leadership position amongst international oil companies in the global LNG business.
An integrated upstream and LNG project, Qatargas 4 will produce 1.4 billion cubic feet per day of natural gas, including an average of approximately 70 thousand barrels per day of associated natural gas liquids from Qatar's North Field over the 25 year life of the project. The project also includes a 7.8 million tons-per-annum (mtpa) liquefaction plant and related LNG shipping capability. Qatargas 4 is a joint venture between Qatar Petroleum (70 percent) and Shell (30 percent). The majority of the LNG will be delivered to the growing natural gas market in North America. LNG deliveries are expected to commence around the end of the decade.
Shell's LNG equity sales in 2004 were 10.15 million tons from projects in Nigeria, Malaysia, Brunei, Oman and Australia. Three new LNG trains are currently nearing start-up, within budget and schedule expectations, in Oman and Nigeria. Good construction progress is being made on additional new trains in Australia, Russia and Nigeria for start up in the coming years. Now, with the addition of Qatargas 4, Shell's equity LNG production capacity is expected to approximately double by the end of the decade.
Shell also announced today that it has reached agreement with Southern LNG Inc., a wholly owned subsidiary of El Paso Corporation, to acquire additional capacity at the Elba Island LNG import terminal in Georgia in the United States. In addition Shell has reached agreement with Elba Express Pipeline Company LLC, a wholly owned subsidiary of SNG, to acquire capacity in a new natural gas pipeline. Both projects will be filed with the U.S. Federal Energy Regulatory Commission (FERC) for approval in the third quarter of 2006. The intention is that this capacity will be utilized to import Qatargas 4 volumes into natural gas markets in the eastern United States.
The deal with El Paso will further strengthen Shell's LNG import position in North America. In addition to Elba Island, Shell has capacity rights at the existing Cove Point LNG terminal in Maryland and in the Altamira LNG terminal under construction on Mexico's east coast. Shell also has capacity rights at the Energia Costa Azul terminal currently under construction on the Pacific coast of Mexico. LNG supplies for these projects are planned from Shell's portfolio of existing and future LNG projects.
Linda Cook added, "With global demand for LNG expected to double this decade, the addition of Qatargas 4 and additional Elba Island capacity to Shell's global portfolio of LNG assets will further strengthen our leading industry position in this exciting sector."
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