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THE WALL STREET JOURNAL: Qatar awards LNG contract: "The other will be managed by QatarGas IV, which is owned by Qatar and Royal Dutch Shell PLC. The QatarGas project so far has five such LNG trains.": Thursday 22 December 2005

Chiyoda, Technip
to build two plants
in $4.27 billion deal
December 22, 2005

TOKYO -- An alliance of Japan's Chiyoda Corp. and Technip SA of France won a 500 billion yen ($4.27 billion) contract to construct two liquefied-natural-gas production plants in Qatar.

The deal will help the Middle Eastern country work toward its ambitious plan to boost its overall LNG production capacity to 77 million metric tons a year by around 2010. Qatar is hoping to capitalize on an expected rise in global gas demand in the years ahead by becoming the world's largest LNG producer.

Under the contract, the two engineering companies will design, construct and procure equipment for the two LNG "trains," or plants, each with a capacity of 7.8 million tons a year, a Chiyoda executive said at a news briefing.

Hiroshi Kobayashi, senior executive vice president at Chiyoda, said his company makes up about 60% of the joint venture, while Technip accounts for the remainder.

"The 500 billion yen order is one of the largest [one-time projects] for the hydrocarbon business," Mr. Kobayashi said.

One of the two new LNG trains will be managed by the QatarGas III joint venture, which is 70%-held by state-owned Qatar Petroleum and 30% by ConocoPhillips. The other will be managed by QatarGas IV, which is owned by Qatar and Royal Dutch Shell PLC. The QatarGas project so far has five such LNG trains.

Output from the first of the new trains will be exported to North America starting in 2009, while production from the other one will start going to North America in late 2010.

The announcement follows a race between the Chiyoda-Technip alliance and a consortium including Japan's JGC Corp. and U.S.-based Halliburton Co.'s Kellogg Brown & Root unit.

Although Chiyoda originally expected the latest order to come during Japan's next fiscal year, which starts in April, the recent continued rise in gas prices likely brought the projects forward, Mr. Kobayashi said.

The Chiyoda executive said the deal will likely complete Qatar's near-term LNG projects. But Chiyoda expects the country to continue launching gas-to-liquid, petrochemical and gas-distribution projects.

Energy experts say a gas-to-liquid, or GTL, oil will be the next-generation cleaner automotive fuel in Europe and Japan, as it contains a lower percentage of sulfur and nitrogenous compounds. Auto emissions of sulfur oxide and nitrogen oxide can be dramatically reduced when using existing diesel oil blended with the new fuel.

At a GTL plant, natural gas is formed into a mixture of carbon monoxide and hydrogen, which is then liquefied to petroleum, or what is called GTL oil.

Write to Shigeru Sato at and Natsuo Nishio at

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