Japanese Companies Buy into New Qatar Refinery in Growing Trend

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Researched by Industrial Info Resources (Sugar Land, Texas). Four Japanese companies will take a total of a 19% share in a new oil refinery project to be constructed in Qatar. This marks the first time that Japanese interests have invested in an overseas refinery. The move has been motivated by the fact that domestic demand for fuel in the Japanese domestic market has been slowing down and refining representation in the global market is seen as a necessary move.

Idemitsu (TSE:5019) and Cosmo Oil (TSE:5007) , the third and fourth largest refiners in the Japanese domestic market, respectively, are both taking a 10% stake in Qatar Petroleum’s Laffan Refinery project, which will be a 146,000-barrell per day (bpd) plant in the Ras Raffan Industrial Center. The two giant trading houses, Mitsui (TSE:8031) and Marubeni (TSE:8002) will each take a 4.5% share in the project. ExxonMobil (NYSE:XOM) (Irving, Texas) and Total (NYSE:TOT) (Paris, France) have 10% stakes, leaving Qatar Petroleum with 51%. Once complete, the $800 million refinery project is scheduled to come on stream in 2008 and will use gas condensates as feedstock. The major units of the refinery complex include a condensate splitter and LPG/naphtha and kerosene hydrotreaters to desulfurize the products enabling the plant to meet the most stringent quality specifications. The project scope also covers associated storage and export facilities and synergies with other plants at Ras Raffan are being maximized.

The $669 million E+P+C (engineering, procurement and construction) contracts for the project were won in 2005 by a consortium of GS Engineering & Construction (A006310) (Seoul, South Korea) and Daewoo Engineering & Construction (DE:DSW) (Seoul).

Idemitsu is looking to take a share in more energy projects in the natural gas and petrochemicals sectors in Qatar. The company invested $86 million for its stake in the refinery. The other Japanese companies have not disclosed the details of their investments in the project. Marubeni currently has LNG business in Qatar and has said that it wants to expand operations in the country and boost trading volumes of Qatari crude oil.

Although Qatar is the lowest volume oil producer in OPEC, it has set a target of becoming the world’s largest exporter of LNG. From a current annual output of 30 million tons per annum it is aiming for an output of 77 million tons by 2010.

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