Boston, MA -- (SBWire) -- 06/07/2013 --The Qatari petrochemicals industry is set to continue its capacity surge, but BMI warns that high ethane prices and a lack of downstream diversification and added value could erode margins and upset its chances of competing in the global market in the long term.
Of concern are the potential constraints on Qatar's ethane availability and the cost of supply. The Qatari authorities may decide to limit gas production to extend the lifespan of productive fields and could raise prices further. Already gas costs are exceeding US$3.00/mn BTU and this could erode Qatar's competitive advantage against new US capacities, although the decision to focus on mix feed crackers (53% ethane, 47% propane) should help diversify feedstock and allow greater flexibility. Additionally, these new plants will only add to Qatar's dependence on commodity petrochemicals with little drive towards highperformance and speciality grades, which could add value to exports and allow for direct competition with producers in Japan and other more mature markets.
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On the upside, Qatar will benefit from the sanctions against Iran, as Iran is its closest regional rival in terms of future petrochemicals capacity, after Saudi Arabia. However, competition will heighten if trade sanctions related to its nuclear programme are relaxed and its petrochemicals investment programme gets back on track, with the potential for Iran to account for 9% of future global ethylene capacity. Qatar will also have to compete with rapidly expanding Asian petrochemicals industries.
BMI notes the following developments in Qatar's petrochemical industry:
- Qatar Petroleum (QP) is pursuing a proposed joint venture (JV) with Royal Dutch Shell at Ras Laffan - known as Al-Karaana - which is expected to include a mix feed steam cracker, two MEG lines with combined capacity of 1.5mn tonnes per annum (tpa), a 300,000tpa linear alpha olefins facility and an oxo alcohol unit; altogether, total finished petrochemicals production capacity will be over 2mn tpa. In Q113, Fluor Corp was given the front-end engineering and design (FEED) contract. The plant will become the world's largest MEG site with 1.5mn tpa capacity. Shell will have a 20% stake in the JV with QP holding the rest.
- We retain our forecast for total ethylene capacity to reach 6mn tpa by 2017. Beyond our forecast period, QAPCO's US$5.5bn JV with Total at Ras Laffan is set for completion in 2018, adding capacities of 1.4mn tpa ethylene, 850,000tpa high density polyethylene (HDPE), 430,000tpa linear low density polyethylene (LLDPE), 760,000tpa PP, 83,000tpa butadiene and 125,000tpa pyrolysis gasoline. QAPCO's LDPE capacity is also set to rise to 650,000-700,000tpa following the construction of its third LDPE plant.
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Qatar Petrochemicals Report Q3 2013 - New Market Report
Recently published research from Business Monitor International, "Qatar Petrochemicals Report Q3 2013", is now available at Fast Market Research