Royal Dutch/Shell Group is drawing up plans to enter the Gulf's yet-to-begin gas-to-liquids (GTL) business by investing in at least two to three plants in the short-term, a top company official confirmed.

"Shell plans to invest in at least two to three GTL plants in the next five to six years in the Gulf. We are looking at options in seven different locations in the GCC," said Dr. Tony Wildig, vice-president, new business development, Middle East and South Asia, Shell Exploration and Production International.

Wildig declined to specify any particular country, but hinted there is a lot of interest in Qatar and the UAE.

Shell has a small GTL plant in Malaysia with commercial production of some 12,000 barrels per day since 1993.

Although Wildig declined to confirm, at least two senior industry sources confirmed that Shell is investing in GTL plants in Iran and Egypt and preliminary discussions have taken place with the two countries.

The projects in these two countries are easily over 50,000 bpd capacity and will be built as part of LNG complexes.

"The two projects are in the initial stages and it may take at least another 5-6 years for them to be ready," a senior source said.

Meanwhile, Qatar has taken the lead in GTL projects having awarded a front end engineering and design (Feed) contract to South Africa's Sasol for an estimated $1 billion GTL project at Ras Laffan with capacity of 34,000 bpd.

The engineering, procurement and construction contract is to follow during the summer of 2002 and plant completion is set for 2005.

According to Wildig, GTL is the latest technology in the field of energy, particularly gas, and is environmental friendly.

Describing GTL as "gas in a bottle", he said economies of scale can be achieved through GTL, leading to lower prices of the product.

"The cost of GTL is estimated at $17 a barrel or even lesser, $14 a barrel and economies of scale accrue as one grows bigger and bigger and one can even drive the price to $11 a barrel," he said.

GTL projects are ideal for gas-rich countries to produce fuel, naphtha, liquefied petroleum gas (LPG) and other byproducts from lean natural gas.