Qatar Is To Become 3rd Biggest ME Petrochemicals Producer; To Run 28M T/Y By 2012:.

*** Saudi Aramco, Now Negotiating A JV With Dow Chemical, Is Having At Ras Tanura The

Biggest Mega- Project In The Region; An Integrated Oil Refining And Petrochemicals Complex To Produce Ethylene And Downstream Items As Well As Aromatics

*** Shell's Pearl GTL May Cost $18 Bn To Turn Nat. Gas Into 140,000 B/D Of Ultra-Clean Fuels, Plus LPG And Ethane To Feed Ethylene For LLDPE & HDPE 

*** GCC IPOs Are To Raise $8 Bn In 2006 & More In The Coming Year; Dubai Is Becoming A Big Capital Hub; But The City Is Getting More & More Expensive For Tourists Who Have No Other Business There

Qatar is to become the third biggest producer of petrochemicals in the Middle East next to Saudi Arabia and Iran. By 2012, when Qatar will have become the world's largest exporter of LNG and LPGs/NGLs, the emirate's production of petrochemicals will reach 28 million tons/year.

Qatar is the fastest economy in the world. For a country of just over 800,000 people with an economy on track to double in size by 2011, Qatar has four main objectives in the petroleum sector apart from its goal for the petrochemicals industry:

1. LNG exports will exceed 83 million tons/year by 2014. That will be equivalent to more than 2 million b/d of crude oil. By then Qatar will have become the world's biggest shipper of LNG, with the globe's largest fleet of maritime LNG tankers (see Gas Market Trends of this week).

2. Its crude oil production will exceed 1.1 million b/d by 2010 and Qatar's output capacity may even reach 1.5m b/d by 2015, from less than 900,000 b/d now.

3. It will become the world's biggest source of ultra-clean fuels from gas-to-liquids (GTL) ventures, with a capacity to reach almost 400,000 b/d by 2012/14.

4. Qatar's capacity to refine crude oil and condensate will have risen from 137,000 b/d to 500,000-533,000 b/d by 2012.

Up until the mid-1990s Qatar had taken a back seat in regional and international affairs. Now it is the Arab world's only member of the UN Security Council (UNSC), representing more than 300 million people with diverse views. Qatar's First Deputy PM and Foreign Minister Shaikh Hamad bin Jassim bin Jabr al-Thani was in the international spotlight in the first 10 days of August, calling for swift UNSC action on an Israeli-Hizbullah war in Lebanon, an immediate ceasefire and a complete withdrawal of Israeli forces behind the blue line between the two countries. Qatar was the first Arab state to pledge troops - 200-300 - to the peacekeeping mission in southern Lebanon. Its active participation throughout the crisis highlighted the air of confidence sweeping Doha after five years of unprecedented economic growth.

Qatar's current five-year business plan focuses heavily on building capacity and infrastructure. The plan, running up to 2011, calls for completion of a $130,000 million energy and infrastructure investment programme, a new port and airport to be in operation, logistics centres and free zones to be established, the opening of state-of-the-art health and education facilities, and new systems, procedures and laws to be in place. Qatar's Finance Minister and acting minister of economy and trade, Yousef Hussein Kamal was recently quoted as saying: "Everything is in the pipeline [for this plan]. The cash is there, the contractors are there. We are putting a target date of 2011 for completion". Per capita income in Qatar now stands at above $50,000.

Qatar now has five major petrochemicals projects under construction or planned which will require an investment of more than $8.7 bn. They should be on stream by 2012.

The state-owned Qatar Petroleum (QP) and ExxonMobil Chemical Qatar on Oct. 15 signed a heads of agreement to carry out studies on a proposed $3 billion world-scale petrochemicals complex. The HoA was signed at the Ras Laffan Industrial City by Qatar's Second Deputy PM and Minister of Energy and Industry Abdullah bin Hamad al-Attiyah and ExxonMobil Chemical CEO Michael Dolan. The complex at Ras Laffan will include a steam cracker to produce 1.3m tons/year of ethylene and associated derivative units to produce polyethylene and ethylene glycol. The complex will be a joint venture with QP to hold 51% and ExxonMobil Chemical to have the remaining 49%.

The complex will use ExxonMobil's proprietary steam cracking furnace and polyethylene technologies. It will take gas feedstock from Qatar's offshore North Field and serve markets with premium products in Asia and Europe. Attiyah at the signing ceremony said: "Qatar has embarked on ambitious programmes to utilise and develop its hydrocarbon resources. These programmes aim to ensure efficient utilisation and optimisation of the country's resources through oil and gas developments and through diversifying its sources of income". He said the project will create a very strong position for Qatar to become one of the world's leaders in the chemicals business, The complex will have units to produce 570,000 t/y of high-density polyethylene (HDPE), 420,000 t/y of linear low-density polyethylene (LDPE) and 700,000 t/y of ethylene glycol (EG).

The cracker will use a mixture of ethane and propane sourced from upstream gas developments in the North field and a GTL project in which ExxonMobil is a partner (see below). The project will be the first in the state to have an EG production capability. The complex should be on stream in 2011. It is one of two grassroots petrochemicals complexes planned at Ras Laffan by international oil companies (IOCs) pursuing integrated gas-to-liquids (GTL) schemes. The other is being promoted by the Royal Dutch/Shell Group, which is looking to take gas liquids, and in particular ethane, from its Pearl GTL development to support petrochemicals production (see below)

QP and Honam Petrochemical of South Korea are negotiating a $2.6 bn JV to have an intermediate petrochemicals complex built at Mesaieed to produce 1m t/y of ethylene, 900,000 t/y of propylene and polypropylene (PP), 600,000 t/y of styrene and poly-tyrene, and 150,000 t/y of aromatics. The JV agreement is to be signed before end-2006.

Bids for the project management consultancy (PMC) and front-end engineering and designs (FEED) contract for this project were submitted on Oct. 19. Fluor of the US has done the pre-FEED work. The complex should be commissioned between 2009-10.

The Qatar Petrochemicals Company (QAPCO), a major ethylene and PE producer, is having a $500 high-pressure plant under preparation to be built at Mesaieed to produce 250,000 t/y of LDPE. QAPCO is in the process of selecting the technology for which an agreement is expected later this year.

The Qatar Fertilisers Company (QAFCO), a major producer of urea and ammonia, is having a two-unit plant built at Mesaieed with the capacity to produce 3,200 tons/day of urea and 4,800 t/d of ammonia. The two main contracts have been awarded to Uhde of Germany and Chigago Bridge & Iron (CB&I) of the US. The contractors are working on the FEED and will present an open-book estimate by February, which will form the basis for conversion of the work into lump-sum turn-key (LSTK) contracts. The plant should be on stream in 2010. This will be the fifth set of plants for QAFCO.

QP and Shell in early 2005 signed a letter of intent to have a $2.5-3 bn complex built at Ras Laffan as a 51/49% JV to produce between 1.2-1.6m t/y of ethylene and to have downs-tream units to produce LLDPE, HDPE and EG. This should be on stream by 2011/12. The cracker will take ethane from a GTL venture to be developed in JV with Shell at Ras Laffan.

QP and Shell on July 17 announced they would proceed with the Pearl GTL venture, an integrated development, transport and processing hub for North Field gas. Just months earlier, the status of the venture was cast in doubt amid rising costs worldwide for oil and gas projects, due to shortages of equipment, labour and raw materials such as steel. The Pearl GTL venture may cost as much as $18 billion, triple earlier estimates, based on figures provided by the Shell group. The gas will cost $4-to-$6 per barrel of oil equivalent to produce, the company announced.

Pearl GTL will extract natural gas liquids and ethane, and convert remaining gas into liquid hydrocarbon products through the construction of gas-to-liquids complex in the Ras Laffan Industrial City. Upstream, 1.6 BCF/day of wellhead gas will be produced from the North Field and transported and processed to produce about 120,000 b/d of oil equivalent of condensate, liquefied petroleum gas (LPG) and ethane.

(The North Field holds recoverable reserves in excess of 900 TCF).

Over its lifetime the project will produce upstream resources of 3 billion barrels of oil equivalent. Downstream, dry gas will be used as feedstock for a new onshore, integrated GTL complex, which will manufacture an additional 140,000 b/d of ultra-clear liquid fuels.

The Pearl GTL complex will consist of two 70,000 b/d GTL trains and associated facilities. With the first train to be on stream by 2010, the plant will produce liquid products and fuels comprising naphtha, GTL fuel, normal paraffins, kerosine and lubricant base oils. These ultra-clean fuels will be very much in demand from the nest decade. The second train should be on stream in 2011.

(Shell's oil and gas reserves at current production levels will run out in about nine years, the lowest level among its peers. Last year, Shell replaced 67% of its output, compared with 95% for BP, using US accounting rules. Shell is betting on rising demand for cleaner-burning car fuels, into which GTL can be blended to lower sulphur content).

Qatar's GTL Business: Qatar in early 2007 is to become the world's first exporter of ultra-clean fuels from GTL. This will be several months after the world's first commercial-scale gas-to-liquids at Ras Laffan was completed. Delays in commissioning the $1 bn plant have been caused by technical problems at the plant's utility section. With a capacity to produce 34,000 b/d of the ultra-clean liquid fuels from natural gas, the GTL project named Oryx was completed in June. This is a partnership between QP and Sasol of South Africa.

Chevron, Sasol's partner in the GTL business, will be marketing of the fuels in Europe and North America. The next phase, Oryx-II, is to expand the plant's capacity to 100,000 b/d. Sasol is the world's biggest producer of synthetic fuel from coal, and also produces chemicals with global operations. Sasol by June 2006 had produced more than 1.5 billion barrels of CTL fuel, far ahead of rivals.

After Pearl GTL, another major integrated gas/GTL venture will involve QP in partnership with ExxonMobil. To be on stream by 2012/13, the GTL plant will have a capacity of 154,000-b/d complex, although there has been little news on the project's status for 18 months.

Two other GTL ventures await the green light from Qatar's Emir, Shaikh Hamad bin Khalifa al-Thani. The timing of these will depend on the outcome of the two Oryx ventures and Pearl GTL; if these are successful, as the project leaders forecast, a decision on the two other projects will be speeded up.

Qatar Refining. A surge in domestic demand, coupled with tighter international product specifications, has seen QP placing increased emphasis on its refining business. A new condensate refinery at Ras Laffan with a capacity of 146,000 b/d will be completed by mid-2008. This is due to be followed early in next decade by 200,000-250,000 b/d grassroots oil refinery at the al-Shaheen field complex. Qatar's existing refining business is concentrated on the 137,000 b/d Mesaieed plant. Just under half of its output supplies the domestic market, with the remainder exported.

Domestic demand for petroleum products is growing rapidly. Between 1990 and 2005, it more than tripled to about 17 million barrels a year (b/y). By 2030, this is forecast to reach 140 million b/y. At the same time, stricter international specifications are demanding that Qatar produces increasingly green products with ever-lower sulphur content. The two new refineries are looking to take advantage of rising feedstock availability. The Ras Laffan refinery, now under construction, will take condensate from the Qatargas and RasGas ventures to produce liquefied petroleum gas (LPG), naphtha, kerosine and gasoil. As for the planned 200,000-250,000 b/d al-Shaheen refinery, it will be supplied mainly with crude oil produced at a field operated by Maersk of Denmark. Maersk is becoming the largest foreign oil producer in Qatar.