Qatar and Shell Ink GTL Agreement

Qatar Petroleum and Shell International Gas Limited signed a letter of intent on to study the development of a gas to liquids (GTL) scheme to link with the North Field upstream project. The development would use Shell's Middle Distillates Synthesis (SMDS) technology to convert gas into products such as diesel and kerosene.

Qatari Energy Minister Abdullah bin Hamad al-Attiyah stated that Qatar was developing or studying GTL projects with a total capacity of 800,000 barrels per day (bpd). Shell operates a commercial SMDS plant in Malaysia and is looking at seven other possible projects. If the Qatar project is one of the first to be given the go-ahead, it could come into production by 2007, said a Shell spokeswoman. Its products would be shipped to Europe and the Far East.

Qatar has already signed GTL agreements with South Africa's Sasol to produce 34,000 bpd and ExxonMobil to produce 110,000 bpd. Attiyah said Canada's Ivanhoe Energy had completed a feasibility study for a plant to produce up to 185,000 bpd in two stages.

He said talks were under way with Conoco and Marathon Oil . Conoco proposes to establish a GTL complex of 50,000 bpd capacity, rising up to 300,000 bpd, and Marathon an 80,000 bpd plant. Qatar, whose gas reserves overshadow its oil reserves, has moved to GTL industry to cash in on its mammoth gas reserves -- the third largest in the world, after Russia and Iran.