* Rasgas rules out Barzan gas sales to UAE for now
* Super-rich Qatar seeks bank loans for around half the cost
DOHA, Nov 1 (Reuters) - Qatar’s Barzan gas project to supply its booming domestic demand is now expected to cost $10.3 billion, Qatari energy minister Mohammed al-Sada said on Tuesday, about $1.7 billion more than government cost estimates given at the start of 2011.
Al Sada’s predecessor put the cost of the project at $8.6 billion in January.
It is Qatar’s most expensive since Royal Dutch Shell Plc launched the $19 billion Pearl gas-to-liquids plant in 2006.
Qatar now plans to finance some of the project with a syndicated loan with local and international banks, despite being one of the world’s wealthiest countries thanks its huge liquefied natural gas (LNG) exports.
“There is a significant contribution from local, regional and international banks,” Al Sada said at the formal launch of the project in the Qatari capital Doha.
“We are very happy to see active local banks participate,” he said when asked why the wealthy, World Cup soccer hosting state needed a loan to build the plant.
“This project is mainly to satisfy the additional need for power.”
Qatar produces about 2.8 billion cubic feet (bcf) of gas per day for the domestic market and plans to increase that amount to 4 bcf/day by 2015.
Initial talks on Barzan first took place between Qatar Petroleum, which has a 93 percent stake, and oil major ExxonMobil , which owns the remaining share, in 2007.
But the Barzan project to produce 1.4 bcf/day to meet the LNG exporting giant’s growing gas needs at home was delayed to benefit from falling construction costs, Qatar’s former energy minister said in January. [ID: nLDE7050JH]
The first Barzan gas production line is now expected to become operational in 2014 with the second in 2015.
In addition to feeding power plants, it will supply natural gas to fuel water desalination plants and other industrial users in Qatar, while processing propane and butane for export.
But natural gas exports from Barzan are not currently under consideration.
“Not for the time being,” Hamad Rashid Al Mohannadi, managing director of Rasgas, said at the ceremony when asked by reporters whether some of Barzan’s gas might be exported through the Dolphin gas pipeline to the neighbouring United Arab Emirates, which is also short of gas.
“But the shareholders might decide differently.”
Bankers close to the deal said in August that Qatar Petroleum and ExxonMobil were seeking to raise $4.7 billion via a syndicated loan backed by international, regional and local banks for the project.
“We are in the final stages of financing the project,” Al Mohannadi said, declining to name the banks involved.
The 16-year amortising loan totalling $4.7 billion is split between a $2 billion uncovered loan and $2.7 billion of financing from export credit agencies (ECA), which includes a mixture of covered bank and direct lending, the sources said in August.
The loan would be the largest internationally syndicated loan from Qatar in three years, the bankers added.