ABU DHABI - ADGAS Partnership Till 2019.

The July 3, 1997 agreement which raised ADNOC's share and reduced that of the others, extended the foreign partners' participation in ADGAS until 2019.

ADNOC insisted on raising its share because ADGAS had become quite profitable, with its gross revenues in 1995 having risen to about $1.5 bn and its expenditure limited to $600m. The fall in oil and LNG prices in 1998 has been overshadowed by a big price rise since March 1999.

The Costs & Wider Implications: BP had strived to cut costs across the board before oil prices collapsed in 1998. So the third train and associated installations and storage tanks cost about $1.3 bn. The contract to build the third train was worth around $600m, awarded to Chiyoda Corp. of Japan which lowered its price to help the project's economics.

In lowering its plant price, Chiyoda's move was to be followed by a price war among international contractors. This worsened in March 1996 when JGC/Kellogg won the contract to build the 6.6m t/y Rasgas LNG plant in Qatar at a price of $1 bn. The loser was Chiyoda, which had bid a little over $1 bn. But Chiyoda fought back seven months later in Oman. A partnership of Chiyoda and Foster Wheeler on Nov. 14, 1996, signed with Oman LNG the contract to build a 6.6m t/y LNG complex for $1.2 bn, i.e. about $182m per 1m t/y capacity. In the 1980s, the going price for the construction of a grassroots plant used to be between $600-900m per 1m t/y capacity. So one can see how far plant costs have come down.