EGU awaits Kuwaiti gas deal

28 March 2002

The upstream and downstream facilities contracts on the enhanced gas utilisation (EGU) project will be awarded once Qatar Petroleum (QP)and the US' ExxonMobil Corporationhave signed a sales and purchase agreement (SPA) with Kuwait for the supply of North field gas to the Gulf state. The EGU project, which will be implemented by QP and ExxonMobil, involves the upstream development of part of the offshore North field reservoir to produce 1,750 million cubic feet a day (cf/d) of gas (MEED 1:2:02).

Ras Laffan Liquefied Natural Gas Company (RasGas)has been handed responsibility to engineer, build and operate the EGU facilities on behalf of ExxonMobil. Once the SPA has been signed, RasGas will exercise options contained in contracts placed for the expansion of its own liquefied natural gas (LNG) facilities. The engineering, procurement and construction (EPC) contracts were awarded a year ago to Dubai-based J Ray McDermott Middle East- for the offshore works - and to the Japanese/Italian consortium of Chiyoda Corporation, Mitsui & Companyand Snamprogettifor the onshore facilities. The main components of EGU will be two offshore platforms and an onshore gas-processing plant, which will be identical to the one being built on the RasGas project.

One element of EGU, which will fall outside the scope of the RasGas contractors, will be the subsea pipeline connecting the platforms to the gas-processing plant. This will be tendered separately by ExxonMobil.

QP and ExxonMobil are expected to sign the SPA with Kuwait Petroleum Corporation (KPC)in the second half of the year. Between 800 million and 1,400 million cf/d will be transported via a 590-kilometre pipeline to Kuwait.

Besides supplying the Kuwaiti pipeline, EGU gas is also earmarked as feedstock for the Ras Laffan independent water and power project (IWPP) and the gas-to-liquids (GTL) plant, planned by QP and South Africa's Sasol. Given that EGU will not be completed until late 2005 and the IWPP is due to enter production in the first half of 2003, arrangements are being made to initially deliver gas from alternative sources to the co-generation plant. RasGas and Qatar Liquefied Gas Company (Qatargas)are finalising an SPA with QP, which will see the two LNG producers provide feedstock from their own resources to the IWPP.

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