QATAR - Petrochemical Sector.

Despite difficult times now for the petrochemical industry, this sector in Qatar continues to expand. The sector is controlled by the state-owned Qatar Petroleum (QP), which has new projects to produce more ethylene, in addition to ethylene dichloride (EDC), polyvinyl chloride (PVC), vinyl chloride monomer (VCM), and propylene and polypropylene.

Middle East countries have been investing over $35 bn in new petrochemical ventures and expansions since 1995. The majority of these projects, costing over $25 bn, are located in the GCC area and Iran. The GCC countries would finance another $2ybn worth of petrochemical projects in other parts of the Middle East - although Qatar is not likely to be among them. QP holds 40% in a petrochemical plant in Dunkirk, France, with CdF Chimie (60%) and the JV company is called COPENOR. It has been in operation since 1979.

Expansions are progressing for QP's production of ammonia and urea, which should strengthen the role of Qatar as one of the major fertiliser exporters in the Arab World.

Apart from the current downturn in this industry, Qatar Petrochemical Co. (Qapco) and Qatar Fertiliser Co. (Qafco) have been profitable for years and have raised production steadily. Both are joint ventures between QP and foreign companies set up in the late 1960s and early 1970s, with plants located near each other at Umm Said. Qatar Chemical Complex (Q-Chem), Qatar Vinyl Co. (QVC), Qatar Industrial Manufacturing Co. (Qimco) and others are to become important producers (see following pages).

The global petrochemical industry - which is prone to overcapacity - now is in deep recession, with sales having fallen by about 10% in the past year, whereas in pre-2000 years the growth rate was 4-6% per annum. Prices for key commodities have dropped by 15 to 50% and many chemical companies now operate at a loss.

With GCC and Iranian petrochemical capacities continuing to expand, experts warn that the feedstock cost advantages enjoyed by Qatar and the neighbouring countries are not large enough to obviate the need for proper planning of new investment.