Symbols of diversification, Qatar's industrial centres of Ras Laffan and Messaieed are set to embark on a new era of growth as the country looks to enhance the use of gas as feedstock for downstream industrial development, says a report.

Expansion will be centred initially and primarily on Ras Laffan, where the nation's already-established, globally-important LNG facilities will receive added capacity, says the report in Oil and Gas News, a sister publication of TradeArabia.

Ras Laffan Liquefied Natural Gas Company (RasGas) recently awarded an engineering, procurement and construction (EPC) contract for a third train to a joint venture of Japan's Chiyoda and Mitsui, and Italy's Snamprogetti.

The third train will produce approximately 4.7 million tonnes per year (tpy) of LNG from North Field gas, and is expected to be completed by 2004, bringing RasGas' production capacity to 11.3 million tpy. Upon completion, RasGas will be the largest LNG producer in the world.

The EPC contract includes options for a fourth 4.7 million tpy train, another LNG tank, LNG loading facilities and two trains of sales gas units for a planned Enhanced Gas Utilisation project.

J Ray McDermott's Jebel Ali fabrication yard in Dubai has been awarded the contract to build the offshore production facilities and the pipeline network to produce and pump gas from the North Field to the onshore facilities at Ras Laffan.

The offshore portion of the project will comprise a wellhead platform which will export wet gas 98 kilometres to Ras Laffan, where it will be processed.

The total cost of the RasGas expansion has been put at approximately $1.4 billion. Some 30 per cent of the total will be provided through shareholders' equity, with the remaining 70 per cent - the debt - covered by a $700 million term loan and a $285 million loan provided by the project sponsors.

Banks are expected to form groups to bid for the term loan mandate, which is due to be awarded in September. Financial close is set for late 2001, according to reports.

The RasGas expansion has received the go-ahead thanks to a major sales and purchase agreement which the company signed with India's Petronet in 1999.

Under the contract, the largest of its type in the world, Petronet will buy 7.5 million tpy of LNG over 25 years, which will be delivered to terminals at Dahej and Cochin in India. Deliveries to Dahej, barring any further construction delays, are to begin in late 2003 from existing RasGas trains, according to reports.

RasGas started deliveries last November to its core buyer, South Korea's Korea Gas Corporation (Kogas), which takes 4.8 million tpy.

A new legal entity, RasGas II, was established earlier this year to manage the expansion projects. The entity is 70 per cent-owned by Qatar Petroleum and 30 per cent by ExxonMobil. Petronet will, according to officials, later take a five per cent stake in RasGas II.

Officials have stressed that RasGas II is not a new company, but is rather a corporate mechanism to operate the new LNG trains and cater to future expansions.

The original RasGas consortium groups Qatar Petroleum (66.5 per cent), ExxonMobil (26.5 per cent), and minority Japanese shareholders Itochu Corporation (four per cent) and Nissho Iwai (three per cent).

The second Ras Laffan-based LNG facility, Qatar Liquefied Natural Gas Company Ltd (Qatargas) is also due to expand capacity to 9.2 million tpy by 2005 to meet increased overseas demand.

These include two recent sales and purchase agreements signed with Spain's Gas Natural to supply up to 12.6 million tonnes of LNG over the next 12 years.

The first contract is for the delivery of 5.6 million tonnes of LNG on a free-on-board (fob) basis between this year and 2009. The second specifies 3.5 million tonnes of LNG, ex-ship, to be delivered between 2002 and 2007, while the deal also contains an option to supply another 3.5 million tonnes between 2007 and 2012.

The contract with GasNatural is the first medium-term LNG contract signed by an East of Suez project with a European company, and represents Qatar's first strong foothold in the competitive European gas market. Previously, a Qatargas deal with Spain's Enagas covered 40 spot cargoes.

The contracts represent a major success for Qatargas, which has been actively seeking to expand its markets beyond South Korea, India and Japan.

Qatargas also recently signed $200 million-worth of service and upgrade contracts with Italy's Nuovo Pignone. The contracts, which cover the maintenance and upgrade of gas turbines, are expected to ultimately offer 15 per cent savings on the company's maintenance costs, and will provide additional power for the debottlenecking project.

The installation of the upgraded turbines would be implemented train-by-train from next year to 2004.

Elsewhere at Ras Laffan, QP and Sasol have signed a joint venture agreement and are conducting a front end engineering and design study for an $800 million, 34,000 bpd gas-to-liquids (GTL) project.

The plant, which is expected to come onstream in 2005, will convert approximately 330 million cu ft per day of natural gas from ExxonMobil's Enhanced Gas Utilisation project into 24,000 bpd of diesel, 9,000 bpd of naphtha and 1,000 bpd of LPG.

Under the terms of the joint venture QP will hold a 51 per cent share and Sasol 49 per cent in the project.

The project is based upon Sasol's slurry phase distillate technology, which converts syngas into a waxy, synthetic crude oil.

ExxonMobil's Enhanced Gas Utilisation Project was set up to produce gas from the North Field, with a nominal capacity of 1.75 billion cu ft per day of gas sales to supply domestic demand and export to regional markets.

The project will also produce condensate, butane and propane for export, as well as ethane for feedstock to future petrochemical ventures.

At Messaieed, a number of engineering companies are said to have placed bids for a fourth unit at Qatar Fertiliser Company (Qafco).

Qafco-IV, an ammonia-urea facility, will have a capacity of 600,000 tpy of ammonia and 1.05 million tpy of granular urea. Among the prequalified bidders are Krupp Uhde, Snamprogetti, Kellogg Brown & Root with Chiyoda.

A decision on the turnkey contract for Qafco-IV is expected to be made before the end of this year, with completion set for 2004. Qafco is 75 per cent owned by Qatar Petroleum and 25 per cent by Norway's Norsk Hydro .

Also in Messaieed, National Oil Distribution Company (Nodco) is set to inaugurate the first phase of an expansion programme at its refinery next month, according to reports.

The refinery, which had a capacity of 60,000 bpd, will ultimately add 77,000 bpd of capacity when both phases are onstream. For now, though, two condensate units will be opened to process condensates produced from offshore fields and onshore Dukhan Arab D developments. The units will produce value added products such as naphtha, jet fuel and gasoil.

A 27,000 bpd fluid catalytic cracker unit, which is expected to come onstream later this year, will refine heavy fuel oil into lighter products.