The first of the two downstream legs of the programme is the estimated $1,100 million Q-Chem II, in which QP has a 51 per cent stake and Chevron Phillips Chemicala 49 per cent position. The joint venture will build new high-density polyethylene (HDPE) and normal alpha olefins plants – each with capacity of 350,000 tonnes a year (t/y) – adjacent to the existing Q-Chem plant in Mesaieed.
The second leg, Qatofin, is a three-way joint venture between Qapco (in which Atofina holds a 10 per cent stake), with 63 per cent, Atofina, with 36 per cent, and QP, with 1 per cent. The estimated $550 million project will see the construction of a 450,000-t/y linear low-density polyethylene (LLDPE) plant next to the existing Qapco facilities, also in Mesaieed.
Both the Q-Chem II and Qatofin projects will receive feedstock from the third joint venture initialled on 13 June. A $470 million world-scale – 1.3 million-t/y – ethane cracker is to be built in the Ras Laffan Industrial City, in which Q-Chem II will hold a 53.31 per cent stake, Qatofin will hold 45.59 per cent and QP will hold 1 per cent. The ethane feedstock for the cracker will be sourced from the enhanced gas utilisation (EGU) project and the onshore facilities of the Dolphin project.
The ethylene generated by the cracker will be transported to the two downstream projects through a 120-kilometre pipeline that is to be built between Ras Laffan and Mesaieed. It will initially have capacity of 1.3 million t/y of ethylene, but will be designed for a later upgrade to 1.6 million t/y.
All three projects are expected to come on line in mid 2007.
The overarching project has been through a number of permutations. The possibility of both Qatofin and Q-Chem II having their own ethane crackers was examined, as was the prospect of situating the HDPE and LLDPE plants nearer their feedstock source. ‘Decisions had been made to place the ethylene derivative plants in Mesaieed where significant investment savings are to be realised from synergies with existing petrochemical facilities and infrastructure, which would contribute to reductions in investment and operation costs,’ said QP in a statement.
Royal Bank of Scotland (RBS)is acting as the financial adviser to Q-Chem II and the competition for the advisory mandate for Qatofin has been whittled down to what one banker describes as a ‘two-horse race between BNP Paribasand HSBC Investment Bank‘ (MEED 31:5:02).
‘We are expecting a mandate award imminently, particularly now that the JVs have been signed,’ says one of the bidders. ‘Whoever wins this mandate will have to work closely with RBS because of the shared facility and the need to properly schedule visits to the debt market, but there is no clear picture yet of how these things might be structured.’