Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Qatar Petroleum, Exxon invest in $10 billion Texas LNG project

Published 02/05/2019, 04:36 PM
Updated 02/05/2019, 04:36 PM
© Reuters. FILE PHOTO: A logo of the Exxon Mobil Corp is seen at the Rio Oil and Gas Expo and Conference in Rio de Janeiro

© Reuters. FILE PHOTO: A logo of the Exxon Mobil Corp is seen at the Rio Oil and Gas Expo and Conference in Rio de Janeiro

By Timothy Gardner

WASHINGTON (Reuters) - Qatar Petroleum and Exxon Mobil Corp (NYSE:XOM) said on Tuesday they are investing in a $10 billion project to expand a liquefied natural gas (LNG) export plant in Texas, as companies race to meet global demand for the fuel.

Construction of the Golden Pass LNG project in Sabine Pass, Texas, is expected to begin early this year. The project will add production capacity of around 16 million tonnes of LNG per year after it starts up in 2024.

Reuters had first reported details of the deal on Feb. 1, based on sources familiar with the matter.

"Golden Pass will provide an increased, reliable, long-term supply of liquefied natural gas to global gas markets, stimulate local growth and create thousands of jobs," Exxon Chief Executive Darren Woods said of the final investment decision.

Woods and Qatar Minister of State for Energy Affairs Saad al-Kaabi signed the deal at the Four Seasons hotel in Washington in the presence of U.S. Energy Secretary Rick Perry.

The deal is proof that two of the world's top energy producers can work together and "support rather than subvert an open energy marketplace," Perry said.

The Trump administration has promoted gas drilling and LNG exports in part to offer European customers alternatives to piped natural gas from Russia, while slashing Obama-era environmental regulations on energy operations.

"To understand how critical this is, imagine how Europe feels when the winter winds begin to blow and Russia has its hand on the pipe valve," Perry said. Russia has in recent years slashed gas shipments to Europe through Ukraine during pricing disputes.

Worldwide consumption of LNG is expected to more than double to 550 million tonnes a year (mtpa) by 2030, triggering a race among oil and gas companies eager to dominate the market.

Exxon has a 30 percent stake in Golden Pass and Qatar Petroleum holds 70 percent. The two have been strengthening a global alliance across LNG projects from the United States to Mozambique.

Exxon has signed an agreement to buy a 12.4 percent interest in the existing terminal and a pipeline from ConocoPhillips (NYSE:COP), and the purchase is subject to regulatory approvals, both companies said.

The expansion is part of Qatar Petroleum's plans to invest about $20 billion in the United States as the company seeks to increase its overseas oil and gas business.

Qatar, a tiny but wealthy country, is one of the most influential players in the LNG market with annual production of 77 million tonnes. It plans to boost capacity 43 percent by 2023-24.

Qatar left the Organization of the Petroleum Exporting Countries last year, allowing it to expand in the United States without concerns about proposed legislation that could limit OPEC members' investments in the country.

Energy industry construction firm McDermott International Inc and its partners, Chiyoda International Corp and Zachry Group, have won a contract worth more than $1 billion to build the export project, McDermott said separately on Tuesday.

© Reuters. FILE PHOTO: A logo of the Exxon Mobil Corp is seen at the Rio Oil and Gas Expo and Conference in Rio de Janeiro

The Golden Pass project is one of many that could be approved this year. Companies are expected to make final decisions on projects that could add more than 60 million tonnes per annum of LNG capacity this year.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.