THE WALL STREET JOURNAL: Shell and Qatar To Join Forces On LNG Plant: “Shell… has struggled following an energy-accounting scandal last year that wiped out about a third of the company's booked reserves.” (ShellNews.net) 28 Feb 05

By CHIP CUMMINS

Staff Reporter of THE WALL STREET JOURNAL

February 28, 2005; Page B2

LONDON -- Royal Dutch/Shell Group said it signed an agreement with Qatar to jointly invest $6 billion to $7 billion, or €4.5 billion to €5.3 billion, over the next several years to develop a liquefied-natural-gas plant that will ship gas to markets in Europe and North America.

Shell said yesterday it had reached a preliminary agreement to drill wells in Qatar's North Field, one of the world's largest deposits of natural gas. The gas will be processed at a liquefied natural gas, or LNG, plant, where it will be cooled and loaded onto tankers. Shell will hold 30% of the joint venture, with the remainder held by Qatar, Shell officials said yesterday.

The plant will eventually produce 7.8 million metric tons a year of LNG, bound for markets in Europe and North America. The project's first LNG shipments are expected between 2010 and 2012, Shell said. In addition to bolstering Shell's sizable global LNG portfolio, the Qatar project will give the company access to coveted gas reserves in the Persian Gulf, though it is unclear how much given the early stages of the project.

"It's a huge source of new hydrocarbon production," said Linda Cook, Shell's executive director for gas and power. Shell expects to give the final green light for the investment next year, Ms. Cook said. Shell and its large oil-company competitors have struggled recently to replace the reserves of oil and natural gas that they deplete each year through production. Shell, in particular, has struggled following an energy-accounting scandal last year that wiped out about a third of the company's booked reserves.

The market for natural gas is geographically limited, but liquefied natural gas allows supplies to be shipped via tanker to many parts of the globe.

Also Sunday, state-run Qatar Petroleum and Exxon Mobil Corp. Sunday launched their $12.8 billion Qatar Gas II joint venture to export LNS to the U.K. Qatar Petroleum has a 70% stake in the joint venture and Exxon Mobil has a 30% stake. The project will deliver 15.8 million metric tons of LNG a year to the U.K. over 25 years, the companies said. The first delivery is expected in the winter of 2007-08

--Ahed al Ali in Doha, Qatar, contributed to this article.