by JOE CARROLL (Bloomberg)
Exxon Mobil Corp. has abandoned plans to build a $7 billion facility to convert natural gas to diesel with Qatar's state-owned oil company in exchange for a bigger stake in the world's largest gas field.
In lieu of the gas-to-liquids plant, Exxon agreed to develop the Barzan section of Qatar's North Field, which holds enough gas to meet 44 years of U.S. demand. Exxon Mobil is the first company to win rights to drill the resource since Qatar declared a moratorium in October 2006 on new developments to extend the life span of the nation's reserves.
The Barzan project is expected to pump 1.5 billion cubic feet of gas a day for Qatar's domestic consumption, starting in 2012, Exxon Mobil spokeswoman Jeanne Miller said Tuesday. The agreement also guarantees Exxon Mobil a role in future North Field developments and the ability to sell that gas in more lucrative overseas markets.
"There's a lot of money to be made in natural gas," said Robert Sweet of Horizon Investment Services in Hammond, Ind. "Exxon is taking a very long-term approach to maximizing returns, which is what they always do."
Exxon Mobil, the world's largest oil company, didn't disclose how much it will spend on the initial development of Barzan or how much the new arrangement will add to the company's reserves.
Miller said Exxon Mobil's decisions to abandon the gas-to-liquids project and pursue Barzan were made "in parallel." A phone message left for a Qatar Petroleum spokesman in Doha was not returned.
Qatar last year announced a moratorium until 2010 on new developments in the North Field, which holds an estimated 900 trillion cubic feet of gas.
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