Rasgas Partners Line Up New Clients; Mobil Says The JV Will Make Profit.

The profitability of Qatar's second LNG venture, Ras Laffan Liquefied Natural Gas Co. (Rasgas) will depend on the economy of South Korea, which remains in deep crisis, and the strength of the Indian market. But to make sure Rasgas will not be a losing venture, the partners have left no stone unturned. Mobil, the project leader with a 25% equity in Rasgas, is betting on several short- term buyers in Europe and Asia in addition to the term clients. These include Edison Gas of Italy (see above), which will buy on short-term basis up to 1m tons of Rasgas LNG in 1999 and 2000. It will sign a 25-year agreement with Rasgas for 3m t/y as soon as a 4 BCM/year terminal on an artificial island off the Po Delta in the northern Adriatic Sea has been completed. This will be a JV with Mobil, which has developed a technology for offshore LNG terminals, and Edison could become a major client for Rasgas LNG..

QGPC, which holds 63% in Rasgas, is helping Mobil's marketing efforts in all directions. Also trying to help are the other Rasgas partners: Itochu (4%) and Nissho Iwai (3%) of Japan and a South Korean group (5%). The key to Rasgas' profitability is the position of Korea Gas Corp. (Kogas) which in end-June 1997 signed a 25-year contract with Rasgas to take 4.8m t/y of LNG from mid- 1999. Rasgas' two-train LNG plant will then be on stream with a nameplate capacity of 6.6m t/y and actual production capability of more than 7.5m t/y (see Rasgas profile in Vol. 49). But demand for gas in South Korea has fallen sharply because of its economic crisis. According to Seoul's ministry of trade, industry and energy, the country's LNG imports fell 16.6% to 5.1m tons in the first half of 1998, compared to 6.1m tons in the first half of 1997.

There are indications that LNG imports would keep falling through to mid-1999 and beyond.

The Indian Market: In September 1998, Rasgas was selected by Petronet LNG of India, advised by GdF, for the supply of 7.5m t/y over 20 years beginning from 2002, with the LNG to be delivered as follows: 5m t/y to the planned Dahej terminal in Gujarat, and 2.5m t/y to the proposed Cochin terminal in Kerala.

The details are yet to be negotiated. GdF has the option of taking a 26% stake in the proposed Dahej terminal.

Rasgas was best placed to take the deal because, unlike the other six competitors, QGPC and Mobil gave a promise of price flexibility, and the US major also offered to be a partner in the proposed terminals and in at least one major power plant to be built near one of them.

The Lebanese & Turkish Markets: Mobil/QGPC efforts to sell up to 2m t/y of LNG to Lebanon and build a terminal there on BOT basis have been overshadowed by similar offers made by Total for Yemeni LNG and Amoco for Egyptian LNG. Elf Aquitaine Gas Int'l, now with an office in a Beirut suburb, has proposed to supply the newly-announced Gaz du Liban with 2-3m t/y of LNG to be produced by a new train to be added to the Rasgas complex. Elf, selling lubricants and aircraft fuel in Lebanon, has proposed to build on BOT basis a regasification terminal on the Lebanese coast and a pipeline to the main power plants. In October 1997, Elf and Rasgas signed a letter of intent on the proposed third train in Ras Laffan and LNG supply to Lebanon.

The Lebanese government, however, has initialled an agreement with Damascus to buy Syrian gas by pipeline to be pumped through the north of the country and to be running south. But there will be a new government in Beirut shortly as the state has a new President, ex-Gen. Emile Lahoud. A super-ministry of energy has been proposed to take the sectors of oil and hydraulic and water resources and be in charge of both Gaz du Liban and the power utility EdL.

Elf, an oil producer in Syria, has recently won a deal to collect associated gas from north-eastern oilfields (operated by SPC in the Deir El Zor region)

in partnership with Conoco. The JV will build a 175 MCF/day pipeline by September 2000. Elf could build a gas pipeline from Syria to Lebanon, if Beirut opts against LNG, and have small power plants built along its route on BOT basis.