State energy firm Qatar Petroleum (QP) and the US’ ExxonMobil have formally ended an agreement to develop a new $6bn petrochemicals facility at Ras Laffan.
The pair decided to end the planned collaboration after a series of high-level talks during June and July and QP will now look for a new partner on the project, sources close to the partners say.
Several international oil and petrochemicals companies entered into talks with the state firm over new schemes in July and expect more clarity on the future of their projects when Ramadan ends in mid-September.
MEED reported in early July that the prospective partners had delayed the tender for design and technology contracts on the plant as they tried to work out undisclosed differences. Sources with close ties to the pair say that problems emerged earlier in the year over sales of Qatari liquefied natural gas (LNG) from existing joint venture projects in the emirate.
“There is no official announcement, but yes, it is over, and there are now a number of interested parties looking for new opportunities,” says one source with close ties to QP
Both QP and Exxon declined to comment on the project.
The pair signed a renewed agreement to develop the project in January, following on from plans to study the feasibility of such a project first made public in 2004. Designs for the complex included a 1.6-million-tonne a year (t/y) steam cracker, two 650,000-t/y gas phase polyethylene plants and a 700,000-t/y ethylene glycol plant. The steam cracker and the polyethylene plants were set to be the largest of their kind in the world.
As recently as May, the partners had asked international engineering firms to prequalify to bid on a series of front end engineering and design (Feed) and technology contracts . The tender has now been cancelled, sources close to interested companies say.
Although the partners announced that they were to use the US’ Foster Wheeler as a consultant on the project in 2007, sources close to the engineering firm say that a formal contract was never signed and that it is yet to do any major work on the scheme.
At the time of the second agreement, it appeared that QP did not plan to develop any other petrochemicals projects in the country in the near future, despite lining up France’s Total, UK/Dutch Shell Group and South Korea’s Honam Petrochemical to work on new schemes between 2005 and 2007. Both Total and Shell would both be keen to revive their planned projects, MEED understands.
The project marks the fourth time in 2010 that a major international oil, gas or petrochemicals company has left a scheme in the region and the second time that Exxon has abandoned a multibillion dollar project in Qatar.
In April, the US’ ConocoPhillips ended its involvement in a $10bn-plus refinery project with Saudi Aramco and a $10bn sour gas development with Abu Dhabi National Oil Company (ADNOC) despite both schemes reaching the bid stage for engineering, procurement and construction (EPC) contracts.
In June, the UK’s BG Group decided to abandon its Block 60 exploration and production block in Oman, shortly before it was scheduled to tender contracts to build permanent production facilities at the field.
In February 2007, QP and Exxon announced that they had decided not to move ahead with a planned $7bn gas-to-liquids plant to produce high-quality fuels and feedstocks from natural gas, citing a need to focus on the development of the Barzan gas field.
It remains unclear whether the decision to dissolve the planned petrochemicals partnership will affect any other Qatari projects which Exxon is working on. The Houston-based oil major is involved in almost 80 per cent of the country’s gas projects, including Barzan. QP and Exxon are currently tendering a first phase of engineering, procurement and construction (EPC) contracts on this scheme (MEED 1:8:10).
Meanwhile, regional media reports have emerged that QP has taken a 10 per cent stake in a planned joint venture petrochemicals project at Arzew in Algeria, which was originally slated to be a 51:49 joint venture between Total and state energy firm Sonatrach.