Oman yesterday signed an agreement with Oman LNG and Union Fenosa Gas, making them partners in Qalhat LNG.

Qalhat LNG will own the third liquefied natural gas train in the country, which Chiyoda-Foster Wheeler is building at an overall capital expenditure of $700 million.

Dr Mohammad Bin Hamed Al Rumhy, Oman's Minister of Oil and Gas, said: "This agreement shows we are willing and ready to open our doors to new partners."

He added that Qalhat LNG was an additional endorsement of the Omani government's keenness to diversify the national economy from its dependence on oil.

He revealed that 1.7 million tonne per annum LNG produced at the Qalhat LNG would be sold to Union Fenosa Gas.

Qalhat LNG was incorporated in September 2003, following Oman's decision early last year to build a third LNG train.

The train is being built adjacent to the Oman LNG two-train facility at Qalhat, near Sur, allowing it to share certain Oman LNG facilities.

It will allow Oman LNG to operate the new train and its own two trains as an integrated plant, thus maximising operating efficiency.

The closed joint stock company is owned by Oman (55.84 per cent), Oman LNG LLC (36.8 per cent) and Union Fenosa Gas (7.36 per cent).

Dr Al Rumhy said, after signing the shareholders agreement, that the Omani government was talking to Union Fenosa Gas to join in Qalhat LNG as full partners. He added that construction work at Qalhat LNG was expected to be completed by the end of 2005 and the train was expected to start production by early 2006.

The new train's production of liquefied natural gas (LNG) will be 3.3 million tonnes per annum, and is expected to increase to reach 3.7 million tonnes per annum.

Dr Al Rumhy said that besides selling approximately 50 per cent of its production to Union Fenosa Gas on a long-term agreement, the remainder would be sold to Osaka Gas, Mitsubishi Corp and Itochu Corp.

An agreement with Oman Shipping Company was also signed to handle most shipments from Qalhat LNG.