Shell wins race for Qatar petrochemicals project

19 December 2010

Oil major replaces US’ ExxonMobil at Ras Laffan

UK-Dutch oil major Shell is set to replace the US’ ExxonMobil as Qatar’s partner for a major new petrochemicals complex at Ras Laffan, after signing a memorandum of understanding with state energy firm Qatar Petroleum (QP) to jointly study the development.

The agreement, signed in Doha by Abdulla bin Hamad al-Attiyah, Qatar’s Deputy Prime Minister and Minister of Energy & Industry, and Peter Voser, chief executive officer of Shell, outlines plans for a mono-ethylene glycol (MEG) plant with a capacity of up to 1.5 million tonnes a year (t/y), along with other olefin derivatives.

Global meg capacity in 2010
Middle East30.4
Asia28.7
North America18
China13
Europe7
Other3.4
MEG=Mono-ethylene glycol. Source: Icis, MEED

Shell had been competing with Total Petrochemicals of France to replace ExxonMobil, which formally ended its agreement with QP to develop a new $6bn petrochemicals facility at Ras Laffan after a series of high-level talks during June and July (MEED 12:8:10).

While ExxonMobil had planned to build a 1.6-million t/y steam cracker, a 700,000 t/y MEG plant and two 650,000 t/y polyethylene (PE) plants by the end of 2015, the time frame for the Shell-QP scheme is expected to be pushed back to 2018 according to a source close to the project.

A heads of agreement between the two companies is expected to be in March next year, while front-end engineering and design (feed) work is expected to take up to two years.

The complex is expected to use a mixed-feedstock. “Ethane will officially come from QP, most likely from Pearl [Gas-to-Liquids]. Naphtha feedstock is unlikely, but it will probably use LPG [liquefied petroleum gas],” says the source.  

Qatar’s moratorium on further gas projects from its giant North Field until 2015 to study reservoir behaviour has limited options for more petrochemicals projects and increased competition for gas feedstock in the medium term. Shell and QP are currently building the $18bn Pearl GTL plant, which is due to start up in early 2011.

“It is a logical next step from the joint venture arrangements between Shell and QP in Singapore,” says Paul Hodges, chairman of UK consultancy, International E-Chem.

The agreement is part of a wider strategic cooperation developing between Shell and Qatar operating “throughout the energy value chain”, says Hodges.

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