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Reuters: Qatar, Shell eye long term LNG supply to China

Thursday February 14 2008
By Simon Webb

DUBAI, Feb 14 (Reuters) – Qatar LNG producer Qatargas is in discussions with its partner Royal Dutch Shell for long term LNG sales to China, a Qatargas spokeswoman said on Thursday.

Qatar is the world’s largest producer of liquefied natural gas (LNG), which is gas chilled to its liquid form for easier transport on specially designed ships. Energy-hungry China is building a string of terminals to receive LNG imports.

“The parties are optimistic about these long term supply discussions from Qatargas to China,” the Qatargas spokeswoman said. “Should these discussions be successful this would be the first long term deal for Qatari LNG to China.”

She declined to give further details on the volumes of LNG that Qatar and Shell planned to ship to China or the timeframe of the deal. The discussions could take “some time” to conclude, she added.

In London, a Shell spokewoman said Qatargas and Shell were in talks with Petrochina about long-term LNG sales to China.

“I can confirm that we are in discussions with Qatargas and Petrochina about selling Qatari LNG to China,” she said.

She would not comment on the amount of LNG under discussion.

Qatargas and Shell are partners on the Qatargas IV project, due to bring 7.8 million tonnes of LNG on line in 2010. State oil firm Qatar Petroleum owns 70 percent of the project, while Shell owns the rest. The bulk of the exports had been earmarked for export to the United States, and Shell has arranged capacity at the U.S. Elba Island facility to receive the gas.

It was unclear if Shell planned to divert gas to China previously earmarked for delivery to the United States.

Qatargas has announced in the past two months that it plans to deliver LNG to Mexico and Thailand as it looks to secure diverse markets for its gas.

Qatar aims to produce around 77 million tonnes of LNG in 2010, up from around 31 million tonnes now. The small Gulf Arab state has the world’s third-largest reserves of natural gas after Russia and Iran.

LNG production in Qatar is divided between two companies, Qatargas and Rasgas. State oil company Qatar Petroleum owns a majority stake in both, with international oil companies holding smaller stakes in individual production trains.

(Additional reporting by Daniel Fineren; editing by James Jukwey)

http://www.guardian.co.uk/feedarticle?id=7310399

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