Qatar Petroleum & ExxonMobil Begin Work on Qatargas II Proj.

At a press conference in Doha today, Qatar Petroleum and Exxon Mobil Corporation announced that the companies are commencing a number of significant activities to advance the $12 billion Qatargas II project, which will supply LNG from Qatar to the United Kingdom by the winter of 2007/8. Qatargas II is a joint venture between Qatar Petroleum (70 percent) and ExxonMobil (30 percent).

Making the announcement were His Excellency Abdullah bin Hamad Al-Attiyah, Second Deputy Prime Minister and Qatar Minister of Energy and Industry, and Harry Longwell, Director and Executive Vice President, Exxon Mobil Corporation.

Several milestones have been reached that are critical to the implementation of the project, which is the largest integrated LNG project ever undertaken. These include:

-- Letters of authorization have been signed with Engineering, Procurement and Construction (EPC) contractors for the construction of platform topsides, pipelines and two 7.8 million-ton-per-year (MTA) LNG trains at Ras Laffan Industrial City in Qatar that set new standards for scale and efficiency. Value of the associated contracts is approximately $4.5 billion.

-- Qatargas II and South Hook LNG Terminal Co. Ltd. signed financing documents securing funds to execute the project. Qatargas II entered into funding agreements totaling $ 6.5 billion of debt and South Hook LNG Terminal Co. entered into funding agreements totaling 600 million pounds sterling. In total, $7.6 billion was raised from 57 institutions, the largest energy project financing ever, and the first ever financing on a full LNG chain-integrated basis.

-- The formation of two new companies to manage the LNG importation, terminal operations and sales of natural gas to ExxonMobil Gas Marketing Europe (100 percent ExxonMobil owned) for sale, in turn, to U.K. markets. Qatar Petroleum or its affiliates own 70 percent of the new companies, with ExxonMobil or its affiliates holding the remaining 30 percent equity interest.

-- Execution of sales and purchase agreements in support of the above activities.

These agreements follow those announced last month:

-- A $700 million EPC award to Chicago Bridge & Iron of The Woodlands, Texas, to construct the first phase of the receiving terminal at Milford Haven in South Wales. -- Twenty-five-year time charters for eight LNG transport ships (209,000-216,000 cubic meters) with two consortiums, ProNav-Commerzbank-Qatar Gas Transport Company and Overseas Shipholding Group-Anglo Eastern-Qatar Gas Transport Company. These state-of-the-art vessels will be 50 percent larger than conventional LNG ships, providing additional project economies.

At the press conference, Minister Al-Attiyah said, "The Qatargas II project is a major achievement that will provide the U.K. a significant additional source of natural gas and strengthen the ties between Qatar and the U.K. Working together with our partner ExxonMobil, we have been able to significantly reduce the costs of delivering LNG to the U.K. and so create a strong financeable project. A project of this size and complexity is only possible through the combined strengths of two world class companies, the excellent working relationship that exists between the two companies and the hard work of their staff. I would like to extend our sincere thanks to all the staff of Qatargas II project companies and QP Gas Development Group, as well as the staff in the parent companies, who have worked so hard to bring this exciting day to fruition. This is a proud day for the project's sponsor companies, Qatar Petroleum and ExxonMobil."

Harry Longwell said, "ExxonMobil is extremely proud of our partnership with Qatar Petroleum and we believe the proprietary technologies we have jointly developed for this project, alongside our project management expertise and the sound underlying commercial arrangements announced today create the foundations of a very strong project."

The announced agreements are extensions of a 2002 Heads of Agreement between Qatar Petroleum and ExxonMobil for development of two LNG trains to supply LNG to the U.K. The feed gas for these trains will be sourced from Qatar's giant North Field, which has estimated recoverable natural gas resources in excess of 900 trillion cubic feet. Qatar Petroleum has a 70 percent equity interest in the integrated project and ExxonMobil 30 percent.