Doha suspends Ras Laffan petrochemicals expansion

05 September 2008
Plans for common cooling system shelved because of a lack of interest in plots.

Contractors are expressing doubts over plans to expand the multi-billion-dollar petrochemicals complex at Ras Laffan Industrial City after the client, Qatar Petroleum (QP), told them it was temporarily suspending work on a key project.

QP has been preparing a $500m expansion of the common sea-water cooling system at the complex for the past year, to meet expected demand in the country for more than 1 million cubic metres of cooling water an hour by 2010 (MEED 28:11:07).

However, QP is now telling international contractors that had been lining up to build the cooling system that it is no longer going ahead due to a lack of demand from petrochemicals companies for the plots of land it would have served.

“We have been told that the end-users for our cooling system have decided not to invest in the extra plots for which we were going to be providing the seawater system,” an executive at one Abu Dhabi-based contractor tells MEED. “The plots have not been taken up, so the next phase has been put on hold.”

Under QP’s capital projects schedule, the front-end engineering and design for phase 3 was originally expected to be completed by May 2008.

The shelving of the phase 3 expansion comes in the wake of doubts being raised over the future of several petrochemicals projects in the area.

QP is planning to develop a world-scale petrochemicals complex at Ras Laffan with the US’ ExxonMobil Chemical Company.

However, contractors have not heard anything from QP on the award of the co-ordination and construction package that was expected to be completed by March, leaving some in the industry speculating that it will be postponed indefinitely.

Energy Minister Abdullah bin Hamad al-Attiyah told MEED in February that the project could be delayed for a few months, but insisted this was “normal”, saying discussions were ongoing between QP and ExxonMobil on the scale of the facilities (MEED 30:5:08).

QP and ExxonMobil were unavailable for comment.

In addition to ExxonMobil’s facility, another petrochemicals plant is also planned for Ras Laffan by QP. But it is not clear which partner the state-owned firm will use.

The UK/Dutch Shell Group signed a memorandum of understanding with QP in 2005 to develop a project that would take gas liquids, in particular ethane, from a planned 140,000-b/d gas-to-liquids development to support petrochemicals production. No firm agreement has followed the initial memorandum.

“There is now real doubt in the industry about whether these petrochemical plants will go ahead at all,” says one London-based petrochemicals analyst. “This appears to be something that has been taken off the agenda.”

QP’s downstream division has also been in talks with France’s Total about the possibility of constructing a 1.3 million-t/y cracker at the same location at Ras Laffan in a similar joint venture to the ExxonMobil arrangement.

It is expected that at most only one of the two projects being discussed with Shell and Total will go ahead because of the moratorium on further exploration on Qatar’s North field gas reservoir. Neither Shell or Total were available for comment.

However, other projects are progressing. Earlier this year, Athens-based Consolidated Contractors Company (CCC) won a $600m engineering, procurement and commissioning contract for the second part of the phase 2 expansion of the common cooling seawater system at Ras Laffan Industrial City (MEED 7:2:08).

Ras Laffan: Key facts
Cost of expanding the common seawater cooling system$500m
Capacity of cracker being discussed with Total1.3 million t/y
Contract won by CCC for phase 2 expansion at Ras Laffan$600m
t/y=tonnes a tear. Source: MEED

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