QatarGas-II.

QP (70%) and ExxonMobil (30%) by end-2004 had put in place all the elements for QatarGas-II to take off as an integrated, $12,000m mega-JV. It has set up several affiliates to manage the various project elements. Qatargas-II by end-2004 had become the template for new LNG development in Qatar, given its success. All the key construction contracts and the $7,600m financing deals were signed on schedule in late 2004. With the exception of RasGas-II, launched in 1999, all future capacities were to be built on an integrated basis. It was to use the latest LNG technology from Air Products of the US (APCI) which, by taking advantage of better economies of scale, cut plant unit and shipping costs by 30%. Such cost cuts help explain how the subsequent ventures - RasGas-III, Qatargas-III and Qatargas-IV - could target the US market, the use of LNG super-tankers being one key element.

Qatargas-II is to supply the UK and other European markets. A $4,000m EPC contract was given to a JV of Technip/Chiyoda for two 7.8m t/y trains. The latest deals included a finance for the LNG import/regasification terminal at Milford Haven in south Wales and a $700m EPC job to Chicago Bridge & Iron (CB&I) for Phase-I on the South Hook terminal at Milford Haven. Train-A is to start up in late 2007. Train B should be ready nine months later. Timing and precision in implementation are crucial in this and the other JVs.

ExxonMobil's determination to be the sole foreign partner in this key JV got a blow in late 2004, however, as QP could not resist getting Total on board for Train B. A $3.5 bn deal was signed on Feb. 28, 2005, under which Total was to pay $1 bn for a 16.7% stake in Train-B and to buy up to 5.2m t/y of LNG from QatarGas-II for 25 years. Elated by the outcome of his thrust into the mega-JV to boost Total's brand LNG business on a global scale, its then CEO Thierry Desmarest said: "The execution of this agreement...is another important step in the fulfillment of Total's continuing objective to grow its LNG portfolio". Train-B will start up in mid-2008. A JV for Train-B - QatarGas-IIb - now is owned 65% by QP, 18.3% by ExxonMobil and 16.7% by Total. Total is to market its share of the LNG in Europe and the US, but could also make spot sales to any other market.

Abu Dhabi's National Petroleum Construction Co. (NPCC) in late 2004 got the $500m EPC platform and pipeline contract from QatarGas-II. Technip was contracted help NPCC in providing engineering and procurement services. This EPC job includes three wellhead platforms, the two export pipelines, intra-field pipelines and extensive cabling.

Qatargas-II will have its dedicated fleet to transport LNG to South Hook in Wales. In November, 2004 it signed 25-year time charters for eight ships, of 209,000/216,000 CM, with two consortia: Pronav, Commerzbank and Qatar Gas Transport Co. (Nakilat); and Overseas Shipholding Group, Anglo Eastern and Nakilat.

South Hook LNG Terminal Co. in March 2005 gave CB&I a $325m EPC job for the terminal's Phase-II to double its capacity, refurbish a second loading berth, provide two more 155,000 CM LNG storage tanks, and expand associated facilities. Phase-II is running in pace with Phase-I - construction having begun in mid-2005. Phase-I includes a ship-unloading system, three 155,000 CM storage tanks and a regasification/sendout system. Completion of Phase-I is set for late in 2007. South Hook, a UK firm owned by units of QP and ExxonMobil, will run the terminal.

ExxonMobil and QP each has 45% in a terminal project off the Italian east coast. Final agreements were signed in April 2005 for construction of the 5.8m t/y Isola di Porto Levante terminal. Milan-based Edison has the remaining 10% but will have access to 80% of the capacity. LNG from QatarGas-II will be shipped to the terminal on a weekly basis from 2008. QP and ExxonMobil are financing construction of five LNG tankers to supply the terminal. Work on the site had begun by April 2005, with contracts awarded to Aker Kvaerner of Norway and SnamProgretti of Italy. Two other LNG terminals are under construction in Italy, by ExxonMobil/QP at Rovigo and BG/Enel at Brindisi.

QatarGas-III: This is a $7.5 bn integrated JV between QP (70%) and ConocoPhillips (30%). It will initially have one 7.8m t/y train - No. 6 - in the QatarGas series at Ras Laffan. The LNG, to be on stream in 2009, will go to the US. ConocoPhillips is developing a part of the North Field for QatarGas-III.

Qatargas III is likely to have another 7.8m t/y train, perhaps by 2014 or earlier, if ConocoPhillips sees its share of the US market growing faster than anticipated.