Qatar Petroleum & Shell Sign DPSA for Pearl GTL Project

Qatar Petroleum

Qatar Petroleum and Qatar Shell GTL Limited signed an integrated Development and Production Sharing Agreement (DPSA) that provides for the fiscal and legal terms for the Pearl GTL project. 'Pearl GTL' is the name given to the project announced by QP and Shell last October at a Heads of Agreement signing in Doha. The agreement reaffirms Shell's long-term commitment to Qatar and confirms the company as a leader in GTL development.

The agreement was signed on behalf of Qatar Petroleum by His Excellency Abdullah Bin Hamad Al-Attiyah, Second Deputy Prime Minister and Minister of Energy and Industry of Qatar and by Malcolm Brinded, Vice Chairman of the Committee of Managing Directors of the Royal Dutch/Shell Group of Companies and CEO, Shell Exploration and Production and Shell Gas & Power.

The Pearl GTL project comprises the development of upstream gas production facilities as well as an onshore GTL plant that will produce 140,000 barrels per day (bpd) of GTL products as well as significant quantities of associated condensate and liquefied petroleum gas. The project will be developed in two phases with the first phase operational in 2009, producing around 70,000 bpd of GTL products with the second phase to be completed less than two years later. The project includes the development of a block within Qatar's vast North Field gas reserves, producing substantial quantities of natural gas.

The project is progressing well with the first of two appraisal wells in the North Field drilled in February 2004 and the award of the Front End Engineering and Design (FEED) contract to JGC Inc. of Japan in March this year.

"This agreement is reached in compliance with the directives of His Highness, the Emir, Sheikh Hamad Bin Khalifa Al Thani who set the strategy to achieve optimal utilization of our country's natural resources. This strategy is set to build a bright future for young Qatari generations and to enhance the economic position of Qatar regionally and internationally," H.E. Al-Attiyah said.

H.E. also stated that "the signing of this agreement is a key milestone in the progress of the Pearl GTL project and a major achievement for the State of Qatar. It highlights real progress towards realising our ambition of becoming the GTL capital of the world. We are delighted to partner with Shell on this project.

Malcolm Brinded remarked: "The signing of the DPSA is a significant milestone in this landmark project. Pearl GtL reinforces our leadership position in Gas to Liquids and our commitment to working with Qatar on the development of GTL as a commercially attractive and clean way of delivering natural gas to market. The project itself illustrates our strategy of 'more upstream and profitable downstream', in one integrated development. "

The Pearl GTL plant will produce a range of products, primarily naphtha and transport fuels, with a smaller quantity of normal paraffins and lubricant base oils. GTL Fuel is a clean synthetic fuel for automotive use that is a gas-derived, rather than an oil-derived product, providing strategic diversification of energy supply. As a transport fuel it can be used in light and heavy-duty diesel vehicles, and its low emissions performance has the potential to reduce pollution in major cities. GTL Fuel has been successfully trialled in a number of countries alongside several partners, the most recent one being the Toyota-Shell GTL D-CAT trial launched on July 6th 2004 in London. These trials have demonstrated that GTL Fuel can be used in existing engines and provided considerable evidence on the performance benefits of GTL Fuel.