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Gulf Times (Qatar): Shell’s gas project ‘to cost over $20bn’

Published: Thursday, 22 February, 2007, 09:23 AM Doha Time
By Odai Sirri

COSTS have soared above $20bn at a Royal Dutch Shell project to turn Qatari natural gas into superclean liquid fuel, a senior Qatari official said yesterday.

That would be up from an original budget of $5bn in 2003 and above even the highest estimate of roughly $18bn that Shell has indicated for its Pearl gas-to-liquids plant.

Rising prices for materials such as steel and shortages of manpower are boosting costs in the oil and gas industry. ExxonMobil Corporation pulled out of a similar project in Qatar on Tuesday because of rising costs.

Asked if Pearl had reached $15-$20bn, the Qatari official said: “No it’s much more than that…We’re talking about costs that are four to five times the original budget.”

Shell and Qatar today are to break ground on Pearl, one of a string of projects that form part of Qatar’s plans to get gas to market from the North Field – the largest pure, or non-associated, gas field in the world.

Pearl is central to Shell’s efforts to boost output after it ceded control of the Sakhalin-2 oil and gas project in Russia’s far east to state-controlled Gazprom last year.

A Shell spokesman in London had no immediate comment on the rising cost of Pearl. Earlier, Shell said it had incorporated higher costs when it gave the go-ahead for Pearl last year.

“Nothing has changed,” said Andy Brown, Shell’s manager of operations in Qatar. “All the cost information was included in the final investment decision.”

Rising costs could hinder other investments in ventures like the 140,000 barrels per day Pearl plant, which will convert gas into fuels such as naphtha, used to make gasoline, say analysts. – Reuters
 

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