Shell may spend $ 21 bn on two Qatari gas projects

Nov 26, 2009 01:00 AM

Royal Dutch Shell, Europe's largest oil company, expects spending on two gas projects in Qatar to be as much as $ 21 bn by the end of next year.
Shell will have spent as much as $ 19 bn on the Pearl gas-to-liquids joint venture when it's finished, according to the company. The Hague-based Shell has a 30 % stake in the QatarGas 4 liquefied natural gas project.

"These are large figures in the context of Shell overall, and I know some of you have been looking at the free cash flow position in the company, as a result of this capital spending," Chief Financial Officer Simon Henry said in a transcript of a presentation to analysts in Doha, Qatar.
"We expect that this capital outflow will roll over into a cash inflow across 2011."

Record investment in 2009 let Shell Chief Executive Officer Peter Voser expand programmes including an oil-sands venture in Canada and the Sakhalin-II project in Russia's Far East. Expectations of production coming on stream in 2011 from its Qatari projects may help revive Shell's London-listed shares, which have underperformed rivals including BP this year.
Pearl will process 320,000 barrels of oil equivalent a day into 140,000 barrels of gas-to-liquids products and as much as 190,000 barrels of ethane and natural gas liquids, according to Malcolm Brinded, Shell's executive director for international exploration and production, said in one of the presentations. QatarGas 4 will annually produce 7.8 mm tons of LNG, gas cooled to a liquid.

Pearl GTL will be completed at the end of 2010 and will ship its first fuel cargo in the first half of 2011. QatarGas 4 LNG will be finished in the fourth quarter of 2010 and will ramp up production in 2011, according to Shell. Shell has been marketing QatarGas 4 LNG away from the US under multiyear contracts linked to oil prices, Brinded said.
"So far, about half of the QatarGas 4 LNG has been sold to Middle East and Asia Pacific customers on a long-term take or pay basis, and I am pleased with progress there," he said.

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