UDC secures gas for smelter project

02 November 2002

Plans for a world-scale aluminium smelter at Ras Laffan have passed a key milestone, with the 17 October signing of a term sheet agreement for the gas supply. The agreement, signed between project promoter - the local United Development Company (UDC), Qatar Petroleum (QP)and the US' ExxonMobil Corporation, provides for an estimated 160 million cubic feet a day of dry gas to be supplied to the smelter from the proposed enhanced gas utilisation (EGU) development in the North field (MEED 23:11:01).

The term sheet established key principles for the gas supply agreement. The next step will be the signing of a sales and purchase agreement (SPA), a draft of which has been prepared. Negotiations on the detailed SPA are due to begin soon.

The gas will be used as feedstock for a captive power plant, which will meet the energy requirements of the planned 500,000-tonne-a-year smelter. Given the size of the smelter, a power plant with capacity of at least 800 MW will be required.

UDC is currently carrying out a bankable feasibility study on the project, taking in issues such as technology, design and engineering, port and site logistics and environmental impact.

The company is also holding discussions with prospective technology suppliers. In addition to providing technology, the selected firm, expected to be on board by the end of the year, will take a substantial stake in the project.

UDC has already been allocated a plot in Ras Laffan Industrial City, which will be able to accommodate the planned first-phase capacity as well as an expansion. Initially, the smelter is expected to make use of an existing dry cargo dock.

UDC is targeting project completion in mid-2006. The schedule implies that on-site construction work on the project will have to begin by the end of 2003.

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