Qatar: Major boost for chemicals production

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A move to bring the marketing and sales side of Qatar’s chemical, fertiliser and polymer operations under one umbrella is an indication of the country’s plans to build a larger and more vibrant downstream petrochemicals sector, which is expected to see increased revenues from plans to more than double production by 2020.

While Qatar is already the world’s top exporter of liquefied natural gas (LNG), the government is keen to add value downstream and reduce the country’s economic dependence on gas and oil revenues in line with the state’s National Vision 2030.

The Qatar Chemical and Petrochemical Marketing and Distributing Company (Muntajat), which was launched in December 2012, is expected to consolidate the marketing and sales activities of the country’s nine producers by mid-2013. The Minister of Energy and Industry, Mohammed Bin Saleh Al Sada, told local media the new company would “…position Qatar as the world’s pre-eminent chemical and petrochemical hub”. Muntajat will hold exclusive rights to purchase, market, distribute and sell Qatar’s chemical and petrochemical products.

Under its long-term plans, the government is looking to boost production of petrochemicals from 10m tonnes per year to 23m tonnes by 2020 on the back of a $25bn investment in the industry, Al Sada said at Muntajat’s launch. The country will also use its hydrocarbon reserves to increase the focus on producing more complex chemicals and petrochemicals.

Data from the Gulf Petrochemicals and Chemicals Association show that Qatar boosted its capacity for the production of both petrochemicals and fertiliser by 13% and 15%, respectively, between 2007 and 2011. The industrial state giant, Industries Qatar (IQ), announced record revenues of QR18.7bn ($5.14bn) in 2012, up 13% year-on-year (y-o-y), which was attributed mostly to growth in the fertiliser sector.

Competition is growing in the global chemical and petrochemical industry following a boom in US shale gas production and a move towards self-sufficiency in China. However, readily available, competitively priced gas and full state coffers have given Qatar an edge in the field. “We have embarked upon a major expansion of our downstream sector to ensure greater diversification in monetising Qatar’s abundant natural gas resources,” Al Sada said in a speech to the Meed Qatar Projects 2013 conference.

Qatar Fertilizer Company (QAFCO), IQ’s joint venture with Norway’s Yara International, saw profits for 2012 rise 34% on the previous year’s results, driven largely by the completion of two new production facilities, local media reported. The new developments enabled QAFCO to increase its global market share of urea production to 15% and become the world’s leading producer of the chemical.

However, Qatar Petrochemical Company (QAPCO), a subsidiary of IQ, reported flat revenues and a 6% drop in profits for the year ending December 31, 2012. The company cited weak demand for the low-density polyethylene (LDPE) used in thermoplastic processing, pricing and lower sales volumes at the group’s fuel-additives joint venture as the reasons for the results.

Longer term, however, the future looks promising for Qatar’s petrochemicals industry on the back of rising demand. Industry analyst ChemSystems Global expects worldwide demand for polyolefins, which includes LDPEs, along with other Qatar-produced compounds, to reach 200m tonnes in 2020, up from 111m in 2006.

A wave of new petrochemical projects currently under construction will also support growth. In a separate initiative, for example, Qatar Petroleum has embarked on a joint venture with Shell to construct a $6.5bn petrochemical complex in Ras Laffan, local media reported in March.

Meanwhile, Qatar Fuel-Additives Company (QAFAC), another IQ subsidiary, recently began putting plans in place to roll out one of the world’s largest commercial-scale Carbon Dioxide Recovery plants. The facility, which is scheduled for completion next year, will break new ground in Qatar by capturing CO2 and injecting it into the existing methanol process to increase production capacity.

By 2017, Qatar will have invested $17bn of the $25bn earmarked for the petrochemicals sector, adding about 1.6m tonnes of intermediate products and around 1.5m tonnes of final products to current production capacity levels, according to QNB. “Qatar is moving up the value chain from basic petrochemicals to more complex products,” the bank said.

Muntajat’s CEO, Abdulrahman Ali Al Abdulla, told The Peninsula that he expected Muntajat to increase efficiency, reduce lead times and build strong relationships with customers. The firm assumed responsibility for the global marketing of Qatar Fuel Additives Company (QAFAC) in February, before completing the integration of marketing activities for QAFCO in March. Having now also taken over the sales and marketing of SEEF Limited and Qatar Vinyl Company (QVC) in April, Muntajat’s consolidation plans look to be well on track.

“Muntajat promises customers consolidated logistics for reduced lead times and reliability of supply to meet demand,” Al Abdulla told OBG. “Through the consolidation effort we are reaching a high-level scale that benefits our customers.”

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