$3.5-billion Dolphin project to supply gas-hungry UAE by 2005

June 1, 2002
Gas from Qatar's giant North Field in the Persian Gulf will flow to the United Arab Emirates by late 2005. This is the latest estimate of the Dolphin partners, two years after the project was first announced.

Gas from Qatar's giant North Field in the Persian Gulf will flow to the United Arab Emirates by late 2005. This is the latest estimate of the Dolphin partners, two years after the project was first announced.

Location of the Dolphin export route through Qatari/UAE waters.
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Capital outlay will likely reach $3.5 billion, including two new platforms and over 400 km of subsea pipelines, making this one of the world's largest gas field developments.

Ghanim Al Azdi, Deputy Vice President for Marketing at Dolphin Energy Ltd. (DEL), outlined progress to date and coming milestones at IBC's recent Middle East conference in London.

Much had been achieved, Azdi said, despite the withdrawal of one of the project's original partners, Enron. The main achievement so far has been the signing of the production agreement last December by Qatar Petroleum and DEL, the latter co-owned by the United Arab Emirates Offsets Group (UOG) and TotalFinaElf.

Start-up of production is intended to capitalize on the rapid expansion of the UAE's water desalination and power generation sectors. Demand for both is currently rising by 10% to 12% per year in the UAE.

Power generation

DEL has a memorandum of understanding with Abu Dhabi Water and Electricity Co. to supply gas for power generation. The Emirates are eager to implement more economic energy sources as soon as possible, with much of the north still burning diesel fuel. Dolphin also sees this project creating a stimulus for further industrial zones in the region, with possibilities of storage of gas in local markets to feed expansion of existing grids.

The upstream part of the project involves development of gas reserves in the Khuff formation in two blocks of the North Field via two unmanned platforms. Production will be piped through a new multiphase line a short distance to Ras Laffan on Qatar's northwest coast for processing.

Condensate, ethane, liquid petroleum gas, and sulfur will be stripped out for export to international markets. Remaining dry gas will be piped, following compression, 340 km southeast across the Gulf through a 48-in. trunkline to a riser platform. From there, separate spur lines will take supplies 69 km and 49 km east to Jebel Ali and Taweelah in Abu Dhabi, respectively. Further overland extensions will be installed to take gas south to Maqta and to Fujairah on the Emirates' northeast coast.

Engineering contract

In February, Sofresid of France was awarded the $10-million front-end engineering design (FEED) contract for the upstream facilities, including the platforms, pipeline to Ras Laffan, processing and compression centers, and gas reception/metering stations. In March, Hallibur- ton's Brown & Root secured the midstream FEED contract, largely encompassing the long distance subsea trunkline.

According to Al Azdi, "The capacity of this line will be 3.2 bcf/d, even though we have only agreed so far to purchase 2.2 bcf/d from the Qatari authorities. However, other nearby countries like Oman also have huge demands for gas, so by 2010-11, the Dolphin system could supply an additional 1 bcf/d to the Omani sector."

DEL is aiming for 70/30 non-recourse financing for the project. Options under review include regional, international, and Islamic banks and finance institutions, as well as export credit and multilateral investment agencies. The partners expect financial closure by early 2003.

Increased DEL ownership

When Enron pulled out of the project (before the company collapsed, Al Azdi stressed), UOG bought all of its shares in DEL, and now owns 75.5% of the company. TotalFinaElf, which had also been in the project from the outset via Elf, made its own bid for Enron's interests, but UOG preferred to retain overall control. Now, however, it seeks a third strategic partner for the project. Proposals were received in March from BP, Conoco, ExxonMobil, Occidental, and Shell.

DEL has contracted for 2.2 bcf/d of gas over 25 years. Boosting supplies should not be a problem, with over 600 tcf remaining in the North Field. Gas sales agreements with customers in the UAE are expected to be finalized in September, with the final development plan and main engineering contracts to be issued by the end of this year.