Shell to study Qatar GTL project cost escalation
Sat Apr 22, 2006 9:09 AM ET
yahoo.reuters.com
Shell to study Qatar GTL project cost escalation
DOHA, April 22 (Reuters) - Royal Dutch Shell (RDSa.L: Quote, Profile, Research) will look carefully again at rising costs for a planned Qatar gas-to-liquids (GTL) project before making a final decision, CEO Jeroen van der Veer told reporters on Saturday.
"There will be a very thorough and in-depth look at what the whole cost escalation means for this project," he said. "We have to think about what it means."
"We are at the pre-financial investment decision stage -- we hope that we can take a decision this year," he said, without saying by how much project costs had risen or at what level they would become prohibitive.
The $6 billion, 140,000-barrels-per-day (bpd) GTL plant was planned to start in two-stages with the first onstream in 2008-2009 and the second two years later.
The project's managing director said in February the scope of the project had been split to increase competition in view of the shortage of contractors, and that EPCs would be awarded in 2006.
Qatar's Oil Minister Abdullah al-Attiyah has repeatedly voiced concern about a tight contracting industry and rising material costs, saying that if prices shot up high enough some projects in the energy industry may no longer be feasible.
South African fuels group Sasol Ltd (SOLJ.J: Quote, Profile, Research) is set to launch the world's first commercial-scale GTL plant in Qatar in June, pumping 34,000 barrels per day of diesel. Chevron (CVX.N: Quote, Profile, Research) will do most of the marketing in Europe and North America from the $3 billion Oryx plant.
Other gas projects with Exxon Mobil (XOM.N: Quote, Profile, Research), ConocoPhillips (COP.N: Quote, Profile, Research), Marathon (MRO.N: Quote, Profile, Research) and Sasol/ChevronTexaco (CVX.N: Quote, Profile, Research) have been delayed by up to three years while Qatar revies reserves at its vast North gas field and after a jump in construction costs.
Qatar aims to raise gas production to around 25 billion cubic feet per day, up from 11 currently, by 2011 and triple LNG production to 77 million tonnes.
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