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Reuters: Qatar gas plant on track after Sasol warning-Shell

Wed May 23, 2007 5:32 PM BST

LONDON, May 23 (Reuters) – Royal Dutch Shell said on Wednesday a multibillion dollar project to turn gas into liquid fuel in Qatar was on schedule, a day after Sasol warned a similar venture had problems.

Sasol said its Oryx gas-to-liquids joint venture plant in Qatar had technical snags and would only make a marginal cash contribution to earnings. Shell started building its plant, Pearl GTL, last year.

“Progress is broadly in line with expectations, with estimated completion around the end of the decade,” said Adam Newton, a spokesman for Shell in London.

The project, much larger than Sasol’s plant, is central to Shell’s efforts to boost output.

GTL plants process gas into liquid fuels such as low-sulphur diesel, demand for which is growing as governments worldwide impose tougher emissions standards.

Qatar’s Energy Minister Abdullah al-Attiyah in February said GTL plants were expensive and complex. The Gulf state in 2005 called a halt on new projects from its North Field gas reservoir.

Oryx has the capacity to produce 34,000 barrels per day, making it the world’s largest commercial project of its kind. Shell’s venture will be able to produce 140,000 bpd.

Shell says GTL is a proven technology and that it has achived good results in Malaysia, where it operates a smaller 12,000 bpd GTL plant which started up in 1993.

Rising costs prompted Qatar Petroleum and Exxon Mobil Corp. this year to drop plans to build a GTL plant that would have been a similar size to Pearl.

Shell has said the Pearl project will tap 3 billion barrels and cost between $4 and $6 a barrel. That implies it could cost up to $18 billion, up from an original budget of $5 billion.

“That situation is unchanged,” Newton said. 

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© Reuters 2007. All rights reserved.

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