Qatar Petroleum, ExxonMobil Delay Qatar Cracker

By John Richardson

Qatar Petroleum and ExxonMobil have delayed the start-up of their 1.6m tonne/year cracker and derivatives project in Qatar, my colleague Anna Jagger reported on ICIS news yesterday – quoting sources familiar with the project.

This confirms an earlier media report to this effect – and adds the extra details that start-up of the project could have slipped from 2015 to 2016 due to the possibility of Qatar Petroleum needing to search for a new partner.

Interestingly, Graham Hoar of Nexant is quoted in the ICIS news article as saying that the project’s “gas (feedstock) is not as cheap as you might think and the economics are not as attractive as you might expect.”

He doubts whether either Shell Chemicals or Total Petrochemicals – both rumoured in the earlier media report to be interested in the project – would rush to replace ExxonMobil due to the questionable economics.

The blog had been told last December by Ben van Beurden, executive vice-president of Shell Chemicals, that “ideally, we’d like to build two crackers and two OMEGA process plants on the scale of this one here in Singapore, but at the moment there is simply not enough ethane.

“There are only so many allocations of ethane available from Qatar at the moment and plenty of interested parties.”

We gained the impression at that time that it was the lack of availability of gas rather than the price which was the problems.

The cost of gas might hinge on whether Qatar is keen, for national strategy reasons, to add more petrochemicals.

The recent cancellation of Qatar Petroleum/Hanwha Chemicals cracker project appears to fall into another category as around 70% of it feedstock was due to be naphtha.

Later on we discovered that about 1m tonne/year of by-product ethane is available from the Pearl gas-to-liquids (GTL) project, a joint-venture between Shell and Qatar Petroleum. This could, perhaps, help make the economics of another gas cracker in Qatar work better, given what seems  to be increased ethane gas costs from its huge North Field reserves.

Clearly, we need to do some more work on this story and will keep you informed.

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