ConocoPhillips & Qatar Petroleum Launch Qatargas 3

ConocoPhillips and Qatar Petroleum reports the award of the onshore Engineering, Procurement and Construction (EPC) contract for the Qatargas 3 liquefied natural gas (LNG) project to the Chiyoda Corporation and Technip France Joint Venture (CTJV). The Qatargas 3 project will be located at Ras Laffan Industrial City. This event coincides with the final investment decision for this major LNG project, which will constitute significant additional sources of natural gas for key markets around the world.

The successful launch of the large and complex Qatargas 3 project is made possible through the combined strengths of three world-class groups of companies.

The EPC contract with CTJV covers the engineering, procurement, and construction of onshore facilities for a large-scale LNG train, with a nameplate capacity of 7.8 million gross tons-per-annum.

Qatargas 3 is an integrated project, jointly owned by Qatar Petroleum (70 percent), and ConocoPhillips (30 percent). The project comprises upstream gas production facilities to produce approximately 1.4 billion gross cubic feet per day of natural gas, containing an average of approximately 70,000 gross barrels-per-day of liquefied petroleum gas (LPG) and condensate combined from Qatar's North Field over the 25-year life of the project. The project also includes a 7.8 million gross tons-per-annum LNG train. The LNG will be shipped from Qatar in a fleet of state-of-the-art large LNG carriers, and is destined for sale primarily in the United States. First LNG cargos are expected to be delivered from Qatargas 3 in 2009.

The EPC contract marks the final investment decision for the project, with all definitive agreements signed and financing completed. In addition, Qatargas 3 also signed a Development and Fiscal Agreement, a Sales and Purchase Agreement, and the necessary financing agreements.

Qatargas 3 has received commitments for over $2.8 billion from 26 commercial banks, the Export Import Bank of the United States (U.S. Exim) and Japan Bank for International Cooperation (JBIC).

In order to capture substantial synergies, Qatargas 3 will execute the development of the onshore and offshore assets as a single integrated project with Qatargas 4, a joint venture between Qatar Petroleum and Royal Dutch Shell plc. This includes the joint development of offshore facilities situated in a common offshore block in the North Field, producing approximately 2.8 billion gross cubic feet per day of natural gas and a substantial quantity of associated LPG and condensate, the construction of two identical LNG process trains, and associated gas treating facilities for both the Qatargas 3 and Qatargas 4 Joint Ventures.

Qatargas Operating Company will have responsibility for operations of the upstream, and midstream once constructed.

Speaking at the signing of the EPC contract, His Excellency Abdullah bin Hamad Al-Attiyah, second Deputy Premier and Minister of Energy and Industry of Qatar, said, "Today's event marks the launch of the large scale Qatargas 3 and Qatargas 4 LNG projects which is the final step for Qatar on its road to become the world's leading producer of LNG with 77 million tons per annum by 2010. It is also a clear illustration of what strong and successful partnerships are capable of achieving. I commend the Qatargas 3 and Qatargas 4 projects on reaching this key milestone, and am confident in the continued success of these world-class LNG projects."

"We are extremely proud of our partnership with Qatar Petroleum. The Qatargas 3 project is a major achievement that will help us meet the growing demand for energy by providing our customers with a significant source of natural gas," said ConocoPhillips' Chairman and Chief Executive Officer, Jim Mulva. "We believe our project management expertise and the sound underlying commercial arrangements make this a very strong project."