Jan. 6 (Bloomberg) -- Exxon Mobil Corp. and state-run Qatar Petroleum signed an agreement today to develop an $8.6 billion project for supplying gas to users in the Persian Gulf emirate.
The Barzan venture is Qatar’s most expensive energy project since Royal Dutch Shell Plc announced the Pearl gas-to-liquids plant, now budgeted at $19 billion, in 2006. Qatar Petroleum owns 93 percent of Barzan, with Exxon Mobil holding the remainder.
Barzan will produce 1.4 billion cubic feet of gas a day once its two production plants are completed in 2015, Saad Al-Kaabi, Qatar Petroleum’s director of oil and gas ventures, said at the signing ceremony in the Qatari capital, Doha. Ras Laffan Liquefied Natural Gas Co. will be lead developer of the gas complex. JGC Corp. of Japan and South Korea’s Hyundai Heavy Industries Co. won contracts to engineer and build the facility.
“This project will play a critical and strategic role in sustaining the high growth rate of the Qatari economy,” Qatar’s Energy Minister Abdullah al-Attiyah said at the ceremony.
Qatar is the world’s biggest exporter of liquefied natural gas, with a liquefaction capacity of 77 million tons a year. The peninsular country of 1.6 million people is seeking also to develop gas for its own burgeoning power, industrial and desalination needs. Qatar plans to boost domestic production of gas to 4 billion cubic feet by 2015, up from 2.8 billion cubic feet a day, al-Attiyah said.
Qatar Petroleum and Exxon Mobil signed a memorandum of understanding in 2007 to develop Barzan. They pursued the project in lieu of an earlier plan to jointly build a $7 billion plant for transforming gas into liquid fuels. Qatar decided two years later to postpone Barzan to take advantage of falling costs for materials and labor, a delay that saved Qatar $2.4 billion in expenses, al-Attiyah said.
The partners plan for Barzan’s first gas production plant to start in 2014 and the second in 2015. Exxon Mobil is the biggest foreign investor in Qatar’s liquefied natural gas business, with a stake in 12 of 14 plants.
In January of last year, the U.S. company signed an initial agreement with Qatar Petroleum to build a $6 billion petrochemical plant. Last month, Shell and Qatar Petroleum agreed separately to jointly study the possible construction of a petrochemical plant that also would cost $6 billion.
Qatar may opt to build both plants, each of which would produce different chemical products, al-Attiyah said.
Exxon Mobil shares, up 6.7 percent in the past year, fell 20 cents to $74.70 on the New York Stock Exchange yesterday.
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