Partners delay tenders on $6bn Qatar petrochemicals project as Exxon departure fears grow

01 July 2010

Engineering contractors expected formal invitations to bid on design and technology contracts by the end of June

The partners behind a planned $6bn joint venture petrochemicals project in Qatar have postponed design and technology contract tenders on the scheme amid increasing concerns that one of the sponsors, the US’ ExxonMobil, plans to drop out of the development.

Qatar petrochemicals projects
NameLocationCompletionValue ($m)
QP linear alkyl benzene plantRas LaffanQ2 2015250
QMC melamine plantMesaieedQ2 2010250
QP/ExxonMobil olefins complexRas LaffanQ4 20156,000
Qapco LDPE 3MesaieedQ4 2011550
Source: MEED Projects

Contractors started prequalifying to bid on front end engineering and design (Feed) and technology deals for the scheme in May, but say that a formal invitation to bid (ITB) on the three contracts planned by Exxon and its partner Qatar Petroleum (QP) have been delayed for undisclosed reasons.They had expected to receive tender documents by the end of June.

“We await release of the ITB, but it has been delayed for unstated reasons,” says one engineering executive.

Exxon and QP started talks over dissolving the planned partnership in early June and several international oil and petrochemicals companies have already expressed their interest in taking over the project to the state-energy firm although no definitive decision has been made on either matter, sources close to the project tell MEED.

“We understand that Exxon won’t carry on with the project and are just waiting for something official to be said so we have a bit more clarity on the matter,” says one senior executive with close ties to QP. “I would hope to have a clear signal by the end of July.”

QP and Exxon both declined to comment on the status of 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.

At the time of the second agreement, it appeared that QP did not plan to develop any other petrochemicals projects in the country, 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.

Plans 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.

If the partners do not move ahead with the scheme, Total and Shell would both be keen to renew talks over their proposed petrochemicals schemes, sources close to the matter say.

If Exxon decides to walk away from the project, it will be the fourth time in 2010 that a major international oil, gas or petrochemicals company has dropped a scheme in the region.

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 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.

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