If ExxonMobil quits Doha, other majors may step in

29 June 2010

Gas is still the feedstock of choice and Qatar is a major producer

Just as Qatar seemed to have become a closed shop for international oil and petrochemicals companies looking for access to cheap and abundant feedstocks, a new opportunity may have come up.

US-based ExxonMobil is moving to back out of an estimated $6bn joint venture petrochemicals project with Qatar Petroleum (QP) as the two companies air internal differences.

If Exxon leaves, companies such France’s Total and the UK/Dutch Shell Group who already have agreements in place to develop new petrochemicals schemes with QP, will rush to take the US major’s place. 

With ethane gas allocations drying up across the region, the possibility of developing a new petrochemicals scheme in Qatar is a golden opportunity for firms interested in producing low-cost commodities with a major gas player.

Companies looking at new projects in the Gulf say that Saudi Arabia, the regional trendsetter, has no more allocations to offer, while other major producers such as the UAE and Kuwait are increasingly becoming importers of natural gas as power demand soars. North Africa’s allure is tempered by the difficulty of working with governments in the region.

For all the talk of recent years that huge integrated refineries and complexes are the future for petrochemicals in the region, the fact remains that ethane gas, which can cost as little as $0.75 a million BTUs, is still the feedstock of choice.

Companies already working on gas schemes in Qatar will be particularly interested in leveraging their positions by integrating existing facilities into petrochemicals complexes. This will make production of both commodity gas and petrochemicals efficient and bring down costs even lower.

If Exxon does quit the scheme and another company takes its place, it will be an impressive coup. Whoever develops the next major petrochemicals scheme with QP will be the last of a dying breed.

A MEED Subscription...

Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.