Qatar puts Al-Shaheen refinery project on hold

25 February 2010

Planned Mesaieed scheme was set to process heavy crude

Qatar Petroleum’s (QP) planned $11bn Al-Shaheen refinery has been put on hold indefinitely, according to a source close to the project.

A series of engineering, procurement and construction (EPC) contracts to build the refinery was scheduled to be tendered during 2010. Sources close to the project now say the state energy company has no desire to move ahead with the project.

“The assumption in 2009 was that it would be retendered. But I don’t expect it to be tendered this year,” says one contractor source. “The original scheme was very big. The client will review it with a mind to reduce the capacity and then re-tender”.

Other contractors agree, adding however that they have not received any official confirmation that the project has been cancelled.

The 250,000-barrel-a-day (b/d) refinery would be Qatar’s third if it went ahead. QP originally planned to tender construction deals for the refinery in 2008, but the project has faced a series of delays since then.

In April 2009, QP said it would break up the construction packages for the refinery into smaller sections in another attempt to reduce prices and spread the project risk between several contractors (MEED 3:4:09).

The refinery, intended to process heavy crude oil from the Al-Shaheen oil field, was to be located at Mesaieed.

The front-end engineering and design (Feed) study for the main process units at the refinery was completed at the end of 2009 by France’s Technip, which was also the project management consultant for the Feed phase of the project.

Construction of the refinery was to be split into two phases. The first phase comprised three packages, including a crude distillation unit, a hydrocracker facility, and offsites and utilities work. The second phase, to be carried out on completion of phase one, included a fluid catalytic cracker along with the expansion of the phase one offsites and utility units.

The Al-Shaheen field contributes about 340,000 b/d of oil to Qatar’s total output of 1.4 million b/d. In 2004, QP signed an exploration and production sharing agreement with Denmark’s Maersk Oil to develop the field. The two companies agreed in 2006 to raise production levels from the field to 525,000 b/d by 2011, at a cost of about $5bn.

QP declined to comment on the project.

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