Al-Sejeel just a blip in Qatar's grand plan

25 September 2014

Doha has a reputation for spending money on projects it believes in

After spending billions of dollars ramping up its liquefied natural gas (LNG) infrastructure, Doha understandably wanted to consolidate what it had achieved before planning any further investments in its hydrocarbons sector.  

So when Qatar announced plans in 2012 to build two world-scale petrochemicals plants, there followed a collective sigh of relief from engineering consultancies and contractors, most of whom had enjoyed slim pickings over the previous four years.

The two projects were to be built adjacent to one another at Ras Laffan, in the north of the Gulf state, utilising a mixed feedstock of gas and liquids in order to produce a wider product slate.

News that the second of the two schemes, the $7.4bn Al-Sejeel project, has now been shelved will surely come as a blow to the interested parties looking to win work there. It also jeopardises Doha’s much-trumpeted plan to ramp up petrochemicals production to 23 million tonnes a year by the end of the decade.   

Al-Sejeel is a joint venture of Qatar Petroleum and Qatar Petrochemical Company (Qapco), and both parties now want to look at alternatives to the scheme that would offer a better yield. This is likely to mean a change of scope and a different product slate, although nothing has been announced.

To make such a decision at such a late stage is highly unusual, but if the joint-venture partners believe the economics of the project are not right then it is the correct move.  

Qatar has never been afraid to invest money on projects it believes in, so the shelving of Al-Sejeel should not be considered as anything other than a blip in the forward momentum of the country’s hydrocarbons diversification strategy.

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