Qatar Builds Its Future
Source of picture: The New York Times
By John Richardson
EXXONMOBIL and Qatar Petroleum have formally ended their agreement to build a $6bn petrochemical complex in Qatar, says a report by the Middle East Economic Digest.
This follows the earlier MEED report that discussions to break-up the JV had begun.
Several other international oil and petrochemicals companies have entered into talks with Qatar Petroleum - with more details expected to emerge when Ramadan ends in mid-September, this latest report continues.
An ICIS news article, quoting a consultant, had suggested – when the first MEED story broke – that the higher cost of gas meant that if ExxonMobil wasn’t interested, then quite possibly nobody else would be.
But from recent discussions the blog has had with senior company officials, we feel this isn’t the case.
Feedstock costs for petrochemicals have certainly increased in Qatar as a result of the need to bid the gas away from perhaps more important liquefied natural gas (LNG) projects.
But even though the price of ethane seems likely to have gone up in Qatar, this doesn’t necessarily make the country a bad bet when measured against the economics elsewhere. Ethane would have to rise by a great deal to wipe out the big advantages of making basic derivative such as polyethylene (PE) and mono-ethylene glycol (MEG) in the Middle East.
And one gets the feeling – given the recently extended moratorium on new gas-based projects in Qatar - that the feedstock parcel for this particular project might be the last for a while.
Ethane in general is in tight supply in the Gulf Co-operation Council (GCC), making the number of future ethane crackers few and far between (i.e. future projects with a very high percentage of ethane as feedstock, with a top-up from less-advantaged propane and butane).
So, in other words, get in while you have the chance!