LNG Qatari Projects on Schedule

French energy company Total’s liquefied natural gas (LNG) projects worldwide have so far been sheltered from surging building costs due to its project management strategy, a company official has said.

Total is the world’s second largest LNG producer, with 2006 sales at 8.6mn tonnes and sales forecast to grow by 13% a year on average until 2010, it said.
 

“The projects Total is involved in were organised and launched in a context that allow them to escape the recently observed price overshoot,” said Jean-Marc Hosanski, Total’s senior vice president for LNG.
 

Plants to produce LNG, gas which is frozen into liquid form for loading onto tankers, are springing up in Africa, the Middle East and elsewhere. The surge in projects has helped to raise construction costs, meaning some schemes may no longer be viable.
 

“I’m talking here of the train 6 project in Nigeria and the Yemen LNG scheme, which are currently being built, and which have largely escaped the price surge,” Hosanski said.
 

He added that Total had always been particularly careful to manage its projects in a way that avoided raising cost impacts.
 

“We adapt the contractual structure to the market structure,” Hosanski said, adding that this did not mean the company had completely escaped cost increases.
 

The doubling of costs seen on some projects, he said, were due more to bad project management than a rise in costs.
As an example of sound management, he said the company grouped its drilling rig orders in west Africa, where Total has most of its drilling activity. – Reuters