Qatargas Awards Six-Year Contract to GE Oil and Gas for LNG Pipeline Integrity Management Service

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Researched by Industrial Info Resources (Sugar Land, Texas)--Leading liquefied natural gas (LNG) player Qatargas Operating Company Limited (Ras Laffan, Qatar) has awarded advanced technology and integrity solutions provider GE Oil and Gas (Florence, Italy), a division of General Electric Company (NYSE:GE) (Fairfield, Connecticut), a six-year, multimillion-dollar supply contract, under which Qatargas will be supplied with advanced pipeline integrity management services that will enhance the maintenance and monitoring processes of the company's LNG network. The contract has been awarded to GE Oil and Gas' PII Pipeline Solutions business unit.

Under the terms of the contract, GE Oil and Gas will set up and implement a pipeline integrity management system (PIMS) that will be customized to drive the client's overall integrity management processes. Qatargas will be provided with the associated integrity management elements, and the manuals and procedures covering engineering assessments, in-line inspection and software automation. GE Oil and Gas will set up a project and account management team in Qatar to ensure the success of the project. The work involving pipeline integrity management, integrity engineering services, and in-line inspection tool preparation will be carried out by GE Oil and Gas' pipeline technology centers for excellence in Mission, Kansas, and Cramlington, England.

Qatargas already uses a strong pipeline integrity management program, but the company continuously attempts to adopt the best industry practices, such as the PIMS program of GE Oil and Gas. According to Sheikh Ahmed Al Thani, CEO Engineering & Ventures, Qatargas, the company aims to become the global leader in the LNG sector, Al Thani believes a critical factor that will ensure fulfillment of the target is an assurance of availability and safety while operating the company's gas and condensate transportation systems.

GE Oil and Gas has been associated with Qatargas for nearly 20 years, and has been providing Qatargas with inspection services. Unlike earlier contracts that required GE Oil and Gas to work on LNG pipelines, the new contract involves offshore product lines that will utilize PII Pipeline Solutions' extensive experience with wet gas. Under a separate customer service agreement, GE Oil and Gas' global services unit will support Qatargas' operations for 18 years.

Earlier this week, Emir H H Sheikh Hamad bin Khalifa Al Thani officially inaugurated RasGas Train 6, the sixth natural gas liquefaction train of RasGas Company Limited (Ras Laffan, Qatar), which placed Qatar as a leading player in the LNG sector. RasGas Train 6 has a production capacity of 7.8 million tons per year of LNG and is one of the largest LNG trains in the world. Train 6 began operating in July this year and has successfully increased RasGas' overall production capacity to about 28.5 million tons per year. Train 6 is expected to help Qatar achieve its target of producing 77 million tons per year of LNG by the end of 2010 and RasGas' target of achieving a production capacity of 37 million tons per year by 2010. RasGas expects to achieve its target by implementing seven operating trains. Train 7 is expected to start operations soon and will have a capacity equal to that of Train 6. RasGas Company Limited is a 70:30 joint venture company formed by state-owned Qatar Petroleum (Doha, Qatar) and ExxonMobil Corporation (NYSE:XOM) (Irving, Texas).

In another development, Abdullah al-Attiyah, Qatar's Deputy Prime Minister and Minister of Energy and Industry, said that Qatar would be diverting 10% of its LNG exports from the United States to China, as China is willing to pay a higher price for the gas. About 5 million tons per year of LNG already has been committed to China. In 2008, Qatargas signed supply deals with PetroChina Company Limited (SHA:601857) (Beijing, China) and CNOOC Limited (HKG:0883) (Hong Kong). Gas prices in the U.S. have been affected negatively by low demand, high inventories, and increased domestic supply, causing companies to hesitate from sending large shipments of LNG to the U.S. Although Qatar usually functions under long-term contracts, both RasGas and Qatargas have flexible deals with the U.S., thereby enabling both companies from discontinuing shipments should gas prices remain low. Attiyah has stated that Qatar is willing to look at markets where it is likely to get a better price for its gas, such as Poland and other nations.

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