Qatar changes focus from gas to petrochemicals

21 February 2013

Gas-rich state committed to diversify the methods it monetises its hydrocarbons

Qatar’s hydrocarbons industry is embarking on a diversification programme that aims to massively increase its petrochemicals production while remaining the world’s largest exporter of liquefied natural gas (LNG).

Speaking on behalf of Qatar’s minister of energy and industry, Mohamed al-Sada, Qatar Petroleum (QP) vice-chairman Hamad al-Mohannadi outlined Doha’s plan to monetise the Gulf state’s vast gas reserves in a more diverse way.

Al-Mohannadi was speaking at the MEED Qatar Projects 2013 conference and reiterated Qatar’s ambitious plans to increase petrochemicals production to 23 million tonnes-a-year (t/y) by 2020 from the 9 million t/y it currently produces.

According to the Middle East projects tracker MEED Projects, Qatar has $9.3bn worth of petrochemicals projects at the study, design and contract phase.

Qatar ethylene producers
Company nameLocation Capacity (t/y)
Qatar Chemical (Q-Chem)Mesaieed500,000
Qatar Petrochemical Company (Qapco)Mesaieed720,000
Ras Laffan Olefins Company Ras Laffan1,300,000
t/y=Tonnes a year. Source: Qatar Economic Review/Qatar National Bank

The major project is the $6.4bn QP joint venture with the UK/Dutch oil major Shell. The project consists of a mixed-feed cracker that can use ethane and propane as a feedstock. The capacity will be 1.1 million t/y of ethylene and 170,000 t/y of propylene. Three other technical units will be built to utilise the ethylene feedstock.  They include 1.5 million t/y of monoethylene glycol (MEG), 300,000 t/y of linear alpha olefins (LAO) and 250,000 of oxo-alcohols unit.

The other project is another QP joint venture, this time with the Qatar Petrochemical Company (Qapco). A mixed feed cracker with a capacity of 1.4 million t/y will be built at a complex in Ras Laffan. A further 850,000 (t/y) of high-density polyethylene, 430,000 t/y of linear low-density polyethylene, 760,000 t/y of polypropylene and 83,000 t/y of butadiene will be produced.

The QP and Qapco project will be the first downstream mega-project executed by domestic hydrocarbons companies.

Speaking on the sidelines of the MEED Qatar Projects conference, a senior oil and gas executive working in Qatar said that the move to petrochemicals was ambitious, but necessary.

“No major oil and gas exporter can stand still and be happy with what they have,” he said. “The price for LNG is high in the Asian markets at the moment, but Australia is ramping up its LNG capabilities and the shale gas revolution in the US probably means that it will soon export also. Qatar needs to diversify and chemicals is a good way to do it.”

The Asian LNG price stands at over $16 per million British thermal units (btu) which is why Qatar has been diverting as much of its LNG as possible into that market. However, Australia is expected to overtake Qatar as the world’s largest LNG exporter by 2020 and both Canada and the US are beginning to construct LNG export infrastructure to enable them to sell excess gas produced from shale deposits.

Despite the threat of shale gas to Qatar’s LNG exports, the Gulf state’s deputy prime minister, Abdullah Al-Attiyah has welcomed the increased gas production that is taking place in the US and Canada.  

Speaking at MEED Qatar Projects 2013, the official said that rather than shale gas risking Qatar’s future LNG exports, it strengthened it.

“The increased production of shale gas has been good for the [gas] industry,” he said. “Before shale gas, everyone said that the [conventional] gas industry would only last for 80 years, but now it will last for 250. This means that the gas industry is seen as the one that people want to invest in.”

Al-Attiyah also said that while shale gas prices in the US were low, the cost would go up if the country wanted to become a serious exporter of LNG.

“Building infrastructure costs money and transporting LNG costs money. They will not be able to sell at the $2-$3 [per million btu] they are selling gas for in the US,” he said.

Al-Attiyah also revealed that Qatar has no further plans to build any gas pipelines to neighbouring states within the Gulf region.

“We have the infrastructure in place now that is effectively a floating pipeline,” he said. “Transporting gas by sea means we can be extremely flexible and are not tied into any unnecessary risks.”

The MEED Qatar Projects 2013 conference took place between 18-19 February in Doha.

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