Boston, MA -- (SBWIRE) -- 09/24/2013 -- The Qatari petrochemicals industry is witnessing strong growth as capacity expands, even in the face of a global economic slowdown and threats of escalating feedstock costs. Continued growth demonstrates the confidence the Qatari industry has in future prospects, although BMI warns that planned diversification will not be sufficient to ensure the sector can reap the full benefits of expansion.

Petrochemicals production in Qatar hit 16.8mn tonnes in 2012, up 5.5% y-o-y, making it the second-largest producer in the GCC downstream sector, after Saudi Arabia. This compares favourably with 2.6% global growth, which represented a decline from 3.8% growth in 2011. The rate of growth in Qatar was in line with the GCC average; the Arab Gulf states saw capacity rise 5.5%, to 127.8mn tonnes, in 2012.

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Over the next decade, Qatar plans to spend US$25bn on expanding its domestic petrochemical industry. It also intends to more than double its annual petrochemical production capacity - from 9.2mn tonnes to 23mn tonnes - by 2020. Upcoming projects include the development of a large petrochemicals complex in Ras Laffan by Qatar Petroleum and Qatar Petrochemical Company (QAPCO). An olefins project, valued at US$6.4bn, is also in development by QAPCO and Shell. QAPCO plans to expand the production capacity of its cracker, enabling it to produce up to 1mn tpa of ethylene.

BMI notes the following developments in Qatar's petrochemical industry:

- The recently completed RLOC cracker is set to expand, while ExxonMobil's joint venture (JV) with QP will lead to the construction of an ethane-fed cracker with capacity of 1.6mn tonnes per annum (tpa) ethylene and downstream units, including two 650,000tpa polyethylene (PE) plants and a 700,000tpa ethylene glycol unit, due for completion by 2016.
- QAPCO's plan to expand its facilities and increase its production capacity to around 5mn tpa by 2019 is on track or even ahead of schedule. In 2012, QAPCO invested US$5bn in setting up a new petrochemical complex, which would double the company's production capacity.
- Qatar's petrochemicals-specific ratings are strong, with cracker capacity set to increase significantly over the next five years and the country hosting the second-largest polyolefins production capacity in the Gulf Cooperation Council (GCC), after Saudi Arabia. Qatar is now ranked fourth in the region, with an overall score of 60.4, down 0.2 points and down one place since the previous quarter, due to a deterioration in its Market Risk score. This puts it 0.1 point behind Kuwait and 3.6 points behind the UAE.

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