Qatar Petroleum’s (QP’s) joint venture agreement with Qatar Petrochemical Company (Qapco) to build a world-scale ethane cracker at Ras Laffan stands out for several reasons.

The project, which will cost more than $7bn to execute, is the first megaproject in the country to be built by two Qatari entities without an international partner and whose management teams are predominantly staffed by locals.

The cracker forms part of an ambitious strategy by Doha to increase petrochemicals output from the current 9 million tonnes a year (t/y) to 23 million t/y by 2020. The QP/Qapco scheme is crucial to achieving this goal.

Gas diversification

The increase in production is being initiated by Doha to ensure that its upstream gas operations are fully diversified. The Gulf state is the world’s largest exporter of liquefied natural gas (LNG) with a capacity of 77 million t/y.

However, with increased shale gas production in the US and Canada, as well as large-scale LNG operations due to start in Australia by the end of the decade, diversifying how Qatar uses its vast gas reserves has now been prioritised. 

The QP/Qapco cracker will produce 1.4 million t/y of ethylene when completed, which will feed other units at the proposed complex. A further 850,000 t/y of high-density polyethylene, 430,000 t/y of linear low-density polyethylene (LDPE), 760,000 t/y of polypropylene and 83,000 t/y of butadiene will be produced.

It is different today because you can buy the technology from a provider, which was not possible before

Qatari hydrocarbons executive

Despite Qatar having ample supplies of ethane feedstock, the cracker will be a mixed-feed of ethane and butane. This will allow more flexibility in terms of products and free up ethane for other schemes. The two partners signed an agreement to build the complex in mid-2012. QP will have an 80 per cent share of the complex, with Qapco taking the remainder.

The budget for the project is $7.4bn, which is reflected in the scope and will make it one of the largest petrochemicals projects in the region over the next five years. This also means it is attracting interest from international companies hoping to secure lucrative contracts. 

The configuration phase has been completed and the project will soon move to the front-end engineering and design (feed) phase. The construction tender and execution phases will follow in 2014-15. Completion is expected in 2018.

“This is an ambitious project, but Qatar has the gas and the expertise to be able to do this,” says a senior executive working in Qatar’s hydrocarbons industry. “[Qatar] has good experience in the polyolefins sector and is sticking to its core competencies.”

Qapco came on board after bidding against international companies in 2011 and will be providing most of the expertise for the project. The firm has acquired extensive experience in the three decades it has been producing polyolefins. Qapco is an 80:20 joint venture between Industries Qatar and France’s Total.

It would have been a challenge for two Qatari entities executing a similar scheme alone even 10 years ago, but Doha now believes there is enough technical expertise within the country to be able to build a multibillion-dollar plant. “It is very different today because you can buy the technology from a provider, which was not possible before,” says the Qatari hydrocarbons executive. “Qapco has been producing for 30 years and has grown its own complex into a world-scale production facility. It knows the business.”

Qapco first started operations in Mesaieed in October 1981 and the original set-up was a copy of a facility in France. The plant used ethane as a feedstock to produce 200,000 t/y of ethylene and 170,000 t/y of LDPE and a small amount of sulphur as by-product.

Since 1981, the Qapco plant has grown into a world-scale facility and now has a capacity of 800,000 t/y of ethane and more than 400,000 t/y of LDPE. Further expansion is taking place that will bring LDPE output up to 700,000 t/y.

Petrochemicals hub

The industrial city in the north of Qatar is attracting massive investment in the petrochemicals sector. Ras Laffan has traditionally been the hub for Qatar’s upstream oil and gas operations, with Mesaieed being the centre for industrial activities. However, an area is now being developed in Ras Laffan that will be the base for several major petrochemicals complexes that offers easier access to both gas and liquid feedstock.

The northern industrial city is also already home to the world’s largest ethane cracker. The Ras Laffan Olefins Company (RLOC) plant was completed in 2010 and produces 1.3 million t/y of ethylene.

The cracker’s ownership is split between two local petrochemicals producers, one of whom, Qatofin, is a direct subsidiary of Qapco and Total. The other is the Qatar Chemical Company (Q-Chem), a joint venture between QP and the US’ Chevron. 

Qatofin owns 46 per cent of the RLOC and receives 600,000 t/y of the output, while Q-Chem receives the remaining 700,000 t/y.

“[RLOC] has been a success and proved that large petrochemicals complexes could operate next to LNG infrastructure,” says the Qatari hydrocarbons executive. “This has given Qatar the confidence to build two more world-scale crackers in Ras Laffan.”

Additional crackers

As well as the planned joint venture with Qapco, QP is also committed to another petrochemicals venture at Ras Laffan with the UK/Dutch Shell Group. The Al-Karaana Petrochemicals Complex is a $6.4bn project and is similar in scope to the QP/Qapco scheme.

At the centre of the project is a mixed-feed cracker that will utilise ethane and propane to produce 1.1 million t/y of ethylene and 170,000 t/y of propylene.

This will in turn feed three process plants: a linear alpha olefins (LAO) unit, a monoethylene glycol (MEG) unit and an oxo-alcohols unit.

The project is running around one year ahead of the QP/Qapco schedule and is due for completion in 2017. The US’ Fluor Corporation was awarded the feed for the technical packages of the scheme in March. The cracker is expected to be tendered on a combined feed and engineering, procurement and construction (EPC) basis in mid-2013.  

The ethane and natural gas liquids feedstock mix for both schemes will add flexibility to the product portfolio and value to Qatar’s condensate reserves. The propane and butane will be provided by the Laffan Refinery Company’s (RLC) planned $1bn expansion at its condensate refinery. 

Reinvigorated sector

The amount of activity in Ras Laffan in terms of petrochemicals projects should reinvigorate Qatar’s stagnating oil and gas projects sector. Since the end of the LNG infrastructure boom that took place between 2006 and 2010, only the development of the offshore Barzan gas field could be regarded as a world-scale scheme.

Doha will be hoping the QP/Qapco project becomes a watershed in the history of the country’s hydrocarbons industry and sets the benchmark for future projects involving domestic companies.

“Before this project, Qatar has always had to rely on international companies to offer their skills and expertise,” says the Qatari hydrocarbons executive. “This will prove that we can do things ourselves now. It means we have gone international.”