Occidental signs Dolphin gas agreement in Abu Dhabi

Occidental signed a definitive agreement with the UAE Offsets Group to acquire a 24.5% interest in the Dolphin Project and Dolphin Energy Limited (DEL) for US $310 million.

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By  Massoud Derhally Published  June 5, 2002

Occidental Petroleum Corporation signed on Sunday a definitive agreement with the United Arab Emirates' Offsets Group (UOG) to acquire a 24.5 percent interest in the Dolphin Project and Dolphin Energy Limited (DEL) for US $310 million.

"Occidental brings a number of things...technical knowledge, manpower, experience in the region and financial resources," said Ray Irani, chairman and chief executive of Occidental.

The Dolphin Project and DEL joint venture includes the Abu Dhabi government owned Offsets Group (51 percent interest) and Paris based TotalFinaElf (24.5 percent interest).

"Occidental won by a huge margin...(they paid) a lot more than the second and third bidders," said Ahmed al-Sayegh, a member of the boards of DEL and UOG, at a press briefing after the signing ceremony.

The DEL partners will collaborate on the $3.5 billion Dolphin Project which consists of two parts; a development and production sharing agreement with Qatar to develop and produce natural gas and condensate in Qatar's North Field, and the rights for DEL to build, own and operate a 260-mile-long, 48-inch export pipeline to transport 2 billion cubic feet per day of dry natural gas from Qatar, which has the world's third-largest gas reserves after Russia and Iran to markets in the UAE for a period of 25 years.

When Dolphin becomes fully operational, this project will add incremental daily production of about 125 million cubic feet of natural gas and 9,000 barrels of liquids net to Oxy -- equal to approximately 30,000 barrels of oil equivalent per day.

Launched in March 1999 the project suffered a set back when Enron that had a 24.5% stake withdrew from the project selling its share back to the Offset Group before declaring bankruptcy. DEL recently parted company with Credit Suisse First Boston (CSFB), which is advising on another UAE project, which will cost as much as US $1.9 billion.

A CSFB spokeswoman said in a statement said the bank and Dolphin parted because of differences of opinion over how to finance the venture. Cost cutting at the bank “in no way'” reduced Credit Suisse's commitment to the project, said the spokeswoman.

Production for the Dolphin project is scheduled to begin in late 2005.

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