Shell faces cracker challenge from Total

16 November 2007
Qatar Petroleum holds fresh talks with French rival over the future of Ras Laffan petrochemicals complex.

France’s Total has held talks with Qatar Petroleum (QP) over establishing a world-scale petrochemicals complex at Ras Laffan by 2012, potentially introducing a rival to the complex being promoted by the UK/Dutch Shell Group.

Total, which already holds stakes in Qatar through its Qatar Petrochemical Company (Qapco) joint venture with QP, is understood to be looking to construct a 1.3 million-tonne-a-year (t/y) mixed feedstock cracker, similar in size to the petrochemical complex planned by QP and the US’ ExxonMobil Corporation.

If it receives approval, Total’s plant will be constructed in Ras Laffan and use a mixture of ethane and other gases from local liquefied petroleum gas (LPG) supplies.

While plans for the project are still at an early stage, a consensus is forming among executives in the sector that only one plant will be constructed in the next five years, with Qatar’s moratorium on the future development of its North field curtailing local supplies of feedstock.

Shell signed a letter of intent with QP in early 2005 for the development of an ethane cracker and derivatives complex in Ras Laffan. The start-up date was slated for early in the next decade. Shell is looking to take gas liquids, in particular ethane, from its Pearl gas-to-liquids development to support petrochemicals production.

An executive close to the talks between QP and Total says it is unlikely the state-run energy company will proceed with both plants, although there is no indication that Shell will not proceed with its development.

“There is plenty of condensate and LPG out there [in Qatar] but that does not necessarily make a project attractive and economic on the ground,” the executive says.

He adds that while the Total venture would use mixed feedstock, making it less economic than a pure ethane mix, it could recoup some of the cost by integrating a cracker alongside projects already in place at Ras Laffan.

“You need a clever set-up as it is no use starting completely from scratch,” he says. “It can be executed with a refinery next door to provide a robust product mix.”

He adds that, once the moratorium is lifted by QP, the plant could be expanded through the addition of small furnaces.

Shell, QP and Total were unavailable for comment.

Several complexes are being pursued in Qatar, but rising costs are threatening their economic viability. Costs are thought to have spiralled on the Mesaieed petrochemicals complex planned by South Korea’s Honam Petrochemical Corporation and QP from about $2.7bn to about $4bn.

QP is also pushing ahead with a petrochemicals complex at Ras Laffan with the US’ ExxonMobil Chemical Company (MEED 9:11:07).

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