InterviewThe worst is past for global petchems - QAPCO

19 March 2009 06:21  [Source: ICIS news]

By Bohan Loh and Prema Viswanathan

SINGAPORE (ICIS news)--The worst period for the global petrochemical industry is now over and the outlook for the sector remains bright, a top official of Qatar Petrochemical Co (QAPCO) said late on Wednesday.

“I am optimistic. I see a bright future (for the industry) and demand will pick up,” QAPCO general manager Mohamed Yousef Al-Mulla told ICIS news in an interview.

Al-Mulla said the worst times for the chemical industry were between end-October 2008 and the first week of December.

“Then things started to pick up, at least (enough) to survive,” he said, adding that conditions began to stabilise in January 2009 and circumstances allowed the company to embark on corporate planning in February.

“But we will never dream of (repeating) 2008, that has to be clear,” Al-Mulla said.

In the first nine months to 30 September 2008, QAPCO’s holding company Industries Qatar (IQ) more than doubled its net profits to Qatar riyals (QR)7.18bn ($1.97bn) on robust sales volumes.

But the tide quickly turned in the fourth quarter when the financial troubles of the west reverberated across the globe.

Plunging prices of QAPCO’s petrochemical products such as polymers, ethylene and sulphur, along with the sharp decline in demand, sent IQ's net profits shrinking well below market expectations at QR118m in the last three months of 2008, according to London-based HSBC.

“Never in my life have I seen prices of sulphur reaching $800/tonne (€592/tonne), while today it has fallen to around $40/tonne. We used to look for people to buy our sulphur,” Al-Mulla said.

But Al-Mulla is optimistic that demand could improve earlier than market’s expectations of a pick-up in June or July. “People would be able to breathe,” he said.

QAPCO is well-placed to survive the downcycle thanks to its low-cost gas feedstock availability since Qatar has a quarter of the world’s gas reserves, he said.

QAPCO’s 1.3m tonne/year Ras Laffan ethane cracker would start up “no later than the end of this year” while its 450,000 tonne/year joint venture (JV) linear low density PE (LLDPE) line Mesaieed would come on stream between June and July, the company official said.

Its LLDPE facility would receive feedstock ethylene from its existing 720,000 tonne/year cracker at the same site until its Ras Laffan cracker is completed, after which the PE unit would receive feedstock through a 120km pipeline.

Some 250,000-300,000 tonnes of excess ethylene expected upon the start-up of the Ras Laffan cracker will be sold in the international market until its other 300,000 tonne/year LDPE plant in Mesaieed comes on stream in 2011, Al-Mulla said.

Bids for the engineering, procurement and construction (EPC) of the LDPE project had already closed with technical evaluation completed. The successful bidder would be announced by the end of the year, he said.

“I have got a few, but I cannot announce that (yet),” Al-Mulla said when ICIS news asked if there were plans to construct new production facilities.

QAPCO is a 80:20 joint venture between Industries Qatar and France’s Total Petrochemicals.

($1 = QR3.64 / $1 = €0.74)

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By: Bohan Loh
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