Qatar-Kuwait pipeline takes shape

18 January 2002

The proposed Qatar-Kuwait gas pipeline project took a major step forward on 14 January with the announcement of an agreement in principle between the three promoters - Qatar Petroleum (QP), ExxonMobil Gas Marketing, part of the US' ExxonMobil Corporation,and Kuwait Petroleum Corporation (KPC - MEED 22:6:01; 23:3:01).

'The agreement is a step in establishing the principles and framework for developing a gas sale deal between Qatar and Kuwait,' says an ExxonMobil statement. The in-principle deal follows a memorandum of understanding (MoU) signed in May 2000 for the proposed project (MEED 19:5:00).

'We expect to sign a term sheet by the end of January. It will include details on the volume of gas, the price and the route,' says a KPC official. The next stage in the project will be the signing of a final agreement, expected in mid 2002.

The proposed pipeline will transport between 800 million-1,400 million cubic feet a day (cf/d) of natural gas from Ras Laffan to Al-Zour in southern Kuwait. Construction of the 590-kilometre subsea line will take about three years and project costs are estimated at $500 million. The UK office of the US' Fluor Daniel hascompleted a pre-front-end engineering and design (FEED) study for the scheme (MEED 23:3:01; 9:2:01).

ExxonMobil Gas Marketing will take the lead in setting up a consortium to build and operate the proposed pipeline. The operating venture will include companies based in Qatar and Kuwait, as well as elsewhere in the region.

Gas for the proposed project will be supplied under the enhanced gas utilisation (EGU) project being developed by ExxonMobil and QP at the North field.

There is a possibility that the pipeline will also supply gas to Bahrain, according to industry sources. In early January, Qatar and Bahrain signed an MoU for the delivery of North field gas to Manama. The MoU provides for both parties to carry out a joint gas utilisation study and conclude a heads of agreement. The gas volumes are still to be finalised; Doha has in the past talked of delivering 500 million cf/d to Bahrain (MEED 11:1:02).

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