Hall of Fame

Qatar

Economic News

22 Jul 2010
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Sitting down for dinner at this year's Oil Baron's Ball in Dubai next month will likely be a number of executives from one of Qatar's great energy success stories - RasGas. Lifting one of the prestigious awards at last year's "Excellence in Energy" contest, which precedes the ball, this year the company will be looking to expand on this achievement at what has been widely dubbed the world's "energy Oscars".



It may well see some prizes too, as the company - and its sister RasGas II - have been forging ahead over the last 12 months in building up their lucrative liquefied natural gas (LNG) business.



This month saw Ras Laffan Liquefied Natural Gas Company Limited II (RasGas II) sign Time Charter Agreements with Maran Gas Maritime for the long-term charter of four LNG vessels, which are to be built by South Korea's Daewoo Shipbuilding and Marine Engineering Co. Ltd. At the same time, RasGas itself announced plans to build a 900m euro LNG import terminal off the coast of northern Italy.



RasGas was first established back in 1993, and brought together Qatar Petroleum (QP), Exxon-Mobil RasGas Inc. (a wholly owned subsidiary of Exxon-Mobil), Korea's Koras and Japan's Itochu and LNG Japan. In this joint venture, the state petroleum company holds a 63% share, while Exxon-Mobil holds 25%.



RasGas holds a major stake in Qatar's giant North Field, which has proven reserves of more than 25 trillion cu metres of gas. This makes it the third largest gas field in the world, with more that 15% of the world's total proven gas reserves - estimated to be enough to last Qatar some 250 years.



RasGas has two onshore LNG trains, which give it the ability to manufacture 6.6m metric tonnes per annum (MMTA) of LNG, together with 45,000 barrels per day of condensate and 300 tonnes per day of solid sulphur. To meet the feedstock requirements for these, RasGas has drilled 15 offshore wells on three platforms in the field.



RasGas II came later, in 2001, and is a 70/30 joint venture between QP and Exxon-Mobil. It is also due two trains, with the first of these commissioned in the first quarter of 2004 and the second due to start up in the fourth quarter of 2005. Each train is rated for 4.78 MMTA. Meanwhile, new offshore wells that are set to be the largest producing wells in the entire industry are being drilled to supply the trains' feedstocks.



Given these giant numbers, RasGas and RasGas II are also investing heavily in both transport and overseas LNG infrastructure. Thus, the Italian deal, announced October 13, which will team RasGas with Italy's Edison Gas, part of Edison SpA. The Italians will hold a 10% stake in the investment and have contracted to import 4.6m tonnes of LNG over 25 years from 2007.



Construction of the terminal is due to start later this year, although still requires the agreement of the Italian Ministry of Environment.



The ship deal is also part of this massive expansion plan. According to a statement from the company on October 11, RasGas II will be able to assume up to 30% equity ownership of each of the four vessels. They are to be delivered between November 2005 and June 2008 and will have an LNG cargo capacity of 145,700 cu meters.



The company will charter the vessels for a period of 20 years, with Europe likely to be the main delivery destination.



This deal leaves one ship outstanding from the acquisition process for eight new LNG tankers RasGas began back in July. Three others were earlier chartered, also with Korean shipyards, with the remaining vessel likely to be chartered in the coming weeks.



This also brings RasGas's long-term charter fleet to 14 ships, a significant number and a good guarantee that the company will be able to supply safe and reliable maritime transport for its product well into the future. With deliveries already established to destinations as far apart as the Bahamas and South Korea, RasGas needs such a navy.



As the Qatari government also has big plans for LNG - Doha plans to boost LNG production to 60 MMTA by 2010, up from the current 18 MMTA - there may well be further charters and terminal deals in the pipeline. Thus, as the company's representatives journey to Dubai next month for the petroleum industry's prestigious awards ceremony, they will likely be hoping that such a healthy looking future - and past performance - will give them a good chance for another brace of "Oscars".

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