Sector News

Qatar Petroleum, Shell scrap $6.5-billion petchems project in Qatar

January 14, 2015
Qatar Petroleum (QP) and Shell say they have decided not to proceed with the proposed Al Karaana petrochemicals project in Qatar and to stop further work on the project. “The decision came after a careful and thorough evaluation of commercial quotations from engineering, procurement, and construction bidders, which showed high capital costs rendering it commercially unfeasible, particularly in the current economic climate prevailing in the energy industry,” the companies say in a statement.
The Al Karaana project was initiated with a heads of agreement between QP and Shell in December 2011 and envisioned the construction of a world-scale petrochemicals complex at Ras Laffan, Qatar, by 2018. The complex was to be operated as an 80-20, stand-alone joint venture between the two companies. Al Karaana was to be based on an olefins complex designed to produce 1.1 million m.t./year of ethylene and 170,000 m.t./year of propylene. Downstream units had been expected to include a 1.5-million m.t./year ethylene glycol plant; a 300,000-m.t./year linear alpha-olefins unit; and a 250,000-m.t./year oxo-alcohols plant.
This petrochemicals project is the second to be canceled by Qatar and may impact the country’s stated ambitions to expand its petrochemicals sector as part of a plan to diversify and increase its share of the worldwide chemical and petrochemical market. Last year, Qatar scrapped the Al Sejeel project at Ras Laffan, which was planned by a jv of QP and Qatar Petrochemical Co. (Qapco), because of high investment costs. Industries Qatar (Doha), the stock exchange–listed company that owns 80% of Qapco, says that an alternative downstream project, which will have better economic returns, is being developed.
Qatar, owner of one of the world’s largest gas reserves, has said it is planning to invest $25.0 billion in its petrochemical sector through 2020. The two canceled projects account for much of the expenditure. The Al Sejeel project was estimated to require $6.30 billion and Al Karaana $6.50 billion.
QP and Shell’s existing partnerships include Pearl GTL, the world’s largest integrated gas-to-liquids plant, located at Ras Laffan and which has boosted Qatar’s position as the world’s leading gas-to-liquids location. The partnerships also include Qatargas 4, an integrated liquefied natural gas asset; in addition to joint downstream and upstream investments in Singapore and Brazil.
By Ian Young and Natasha Alperowicz

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