Qatar Looks For Added Downstream Value From Petrochemical Complex

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Researched by Industrailinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Due for completion in August this year, the $1.26 billion Mesaieed Q-Chem Petrochemical complex, which is located in Mesaieed Industrial City approximately 40km south of Doha in the Arabian gulf state of Quatar, is one of a number of Middle East crude oil projects that expects to take advantage of home-based feedstock supplies to launch into value-added downstream petrochemical projects. These projects also make the oil producing states less vulnerable to overcapacity when the price of oil falls.

When completed, the new plant will have an ethylene capacity of 500,000 tons per year. This will be used as a feedstock for the polyethylene plant, which will have a capacity of about 450,000 tons per year for either high or low density polyethylene. There is also a hexane unit capable of producing 47,000 tons per year and a number of ancillary and utility related structures.

The plant is owned by a joint venture between Qatar Petrochemical Company (QAPCO), which is 80% owned by the Qatar General Petrochemical Company (QGPC), and Phillips Investment Company, a subsidiary of Phillips Petroleum Company (NYSE:P) (Bartlesville, OK). Phillips has a 49% share in the venture. The remaining 51% is held by QGPC.

The new facility will receive ethane rich gas as feedstock from the natural gas to liquids plant, which is under construction. The company is hoping for a major cost advantage over its naphtha- based rivals.

An $800 million engineering, procurement, and construction contract was awarded to Kellogg Brown & Root, a subsidiary of Halliburton International (NYSE:HAL) (Houston, Texas), and Technip International (CAC 40)(Paris). Kellogg Brown & Root will supply the ethylene technology and Phillips will provide proprietary technology for the hexane-1 and polyethylene units. The project has been managed jointly from Technip's Paris office and Kellogg Brown & Root's Houston office.

The Q-Chem project is financed through a $750 million loan from an international consortium of banks. The plant's output will be sold through the spot market to Asia, Europe, and the Middle East.