Over the past 15 years, the main focus for Qatar’s energy sector has been developing liquefied natural gas (LNG) export operations. This prolonged expansion has made Qatar the world’s largest exporter of LNG and in December 2010, the country hit its target capacity of 77 million tonnes a year (t/y).

Now that its upstream infrastructure investment programme is complete, Doha has turned attention back to its downstream industries and is planning several new petrochemicals schemes.

Doha’s plans for adding value to its hydrocarbons resources are ambitious. In early 2012, Energy Minister Mohammed al-Sada said that Qatar plans to invest $25bn in its petrochemicals industry over the next eight years. The investment will raise the country’s petrochemicals output to 23 million t/y by 2020, from its current production of 9.2 million t/y.

Competitive edge

“Qatar has built up its petrochemicals businesses gradually over the past 30 years,” says a chemical industry source based in the Middle East. “The initial capital expenditure was in the 1970s, then the late 1990s, and now it seems to be entering a third phase. With so much ethane available, it is natural to use it for chemical production.”

Unlike neighbouring Saudi Arabia, which is investing heavily in its downstream sector to create employment opportunities in conversion industries, Qatar will continue to produce products for the export market.

Utilising cheap ethane as the feedstock for petrochemicals has always given Qatar a competitive edge over producers elsewhere in the world that use naphtha. Qatar charges $1.25 a million BTU for its industrial gas.

Translating this into commercial production means a tonne of ethylene costs about $100 to produce in Qatar from ethane, whereas it would cost about $600-$700 a tonne using naphtha as a feedstock.

The Qatari petrochemicals industry is similar to the upstream sector in that it usually involves a state-owned entity working closely with an international partner, which provides technological expertise and established marketing operations to sell the resulting output.

The main government-owned players in the industry include Qatar Petroleum (QP) and Industries Qatar. Between them, the companies run most of the country’s downstream operations.

Qatar Petrochemical Company (Qapco) commenced operations in 1981 and is one of the largest producers of polyolefins in the Middle East. It is a joint venture of Industries Qatar, which owns 80 per cent, and the French international oil company (IOC) Total, which holds the remaining 20 per cent. 

Qapco produces 800,000 t/y of ethylene from ethane with 650,000 t/y used by Qapco and its subsidiaries in the production of polyolefins within Qatar and the remaining 150,000 t/y exported.

The company uses most of its polyethylene to produce low-density polyethylene (LDPE) and linear low-density polyethylene (LLDPE). It has two LDPE plants with a combined capacity of 400,000 t/y at its complex in Mesaieed Industrial City and will shortly be completing a third LDPE plant, an investment worth more than $500m.

The expansion will give the complex a capacity of 650,000-700,000 t/y, making it the largest single site for LDPE in the world.

Integral role

Qapco will play an integral role in Qatar’s petrochemicals expansion drive, with a $5bn complex planned for Ras Laffan Industrial City. The scope for the new facilities includes a steam cracker that will produce 1.4 million t/y of ethylene, which will be used as feedstock to produce 850,000 t/y of high-density polyethylene (HDPE), 430,000 t/y of LLDPE, 760,000 t/y of polypropylene and 83,000 t/y of butadiene.

The [Qatar Petroleum petrochemicals complex at Ras Laffan] is a cornerstone of Qatar’s downstream plans

Middle East-based chemical industry source

The project is currently at the study phase with the front-end engineering and design due to be tendered in late 2013. The engineering, procurement and construction contracts will be released in 2014, with completion of the plant due for 2018.

Most of Qapco’s LLDPE production is produced by Qatofin, which is a joint venture with Total and QP. The plant, located next to the Qapco complex in Mesaieed has a capacity of 450,000 t/y and was commissioned in 2009.

The Qatofin plant is supplied with ethylene from the 1.3 million t/y Ras Laffan olefins cracker. The cracker is a joint venture of Qatofin, QP and another large local producer, Qatar Chemical Company (Q-Chem), itself a joint venture of QP and the US’ Chevron Phillips Chemical Company.

The ethylene is transported by pipeline from Ras Laffan to Mesaieed with 700,000 t/y going to the Q-Chem complex and the rest being transported to Qatofin.

“After Q-Chem, QP concentrated on its LNG business, but that is changing now,” says the source. “A raft of new projects should see it massively increase its downstream operations.”

Ras Laffan ambitions

The most ambitious of QP’s projects is a $6.5bn petrochemicals complex planned for Ras Laffan. The project is a joint venture of QP and the UK/Dutch Shell Group and is moving forward again after several setbacks stalled progress, most notably the US’ ExxonMobil withdrawing from the scheme.

The project has been split into six packages: the linear alpha olefins (LAO) unit; the monoethylene glycol (MEG) unit; offsites and utilities; the oxo-alcohols unit; project management services and a steam cracker.

The main package will be the mixed-feed steam cracker unit, which will use ethane and propane as feedstock. The cracker will have a capacity of 1.1 million t/y of ethylene and 170,000 t/y of propylene. The joint venture partners have automatically prequalified the five technology providers known as the ‘ethylene club’ to bid on the package, which are the US’ CB&I Lummus, KBR and Shaw, as well as Germany’s Linde and France’s Technip.

The MEG unit will have a capacity of 1.5 million t/y and will use Shell technology. The scope of works involves the construction of two trains, each with a capacity of 750,000 t/y. The LAO and oxo-alcohols units will have capacities of 300,000 t/y and 250,000 t/y respectively. Tenders are due to be released in two tranches in the second and fourth quarters of 2012. Awards will be made in 2013 with commercial production set for 2017.

“Along with the Qapco project, this is a major cornerstone of Qatar’s downstream plans,” says the source. “It is not quite the scale of the largest Saudi Arabian projects, but a $6.5bn complex is still very much world-scale.”

QP is focusing its downstream expansion plans on Ras Laffan. As well as the Shell joint venture, it is planning to build the Ras Laffan aromatics project at the industrial city.

A feasibility study to look at the viability of the scheme is currently being tendered to international engineering consultants, with an award expected in the summer. Early estimates for the project expect the scope to include 1 million t/y of paraxylene, 500,000 t/y of benzene, 1-1.2 million t/y of purified terephthalic acid (PTA) and 650,000 t/y of polyethylene terephthalate (PET).

At present, QP is preparing the project alone, but is expected to invite a partner to join it at a later stage. The study will last for 10 months and is scheduled to be completed in the second quarter of 2013.

The naphtha feedstock for the project is expected to be sourced from the Ras Laffan refinery. It is currently undergoing an expansion that will see an additional 146,000 barrels a day (b/d) of condensate recovered from the North Field. 

Core products

With job creation less of an issue for the government, Qatar has been able to slowly develop its petrochemicals industry by concentrating on a few core products that best add value to its natural resources.

After a 15-year hiatus, Qatar is now gearing up for a spending drive to position itself as a leader in the global polyolefins industry and an important provider of base chemicals for the world’s downstream conversion industry.

“For IOCs, Qatar is one of the easiest countries to do business with as it has developed its joint-venture model over several decades,” says the source. “Added to this, it is a small, secure country, which is why there is generally never a shortage of takers when a megaproject becomes available – whether that is upstream, refining or petrochemicals.”