The
main activities of Qatargas are divided into two main projects with
separate shareholder groups: The upstream joint venture (offshore
production and the onshore receiving facilities) and the downstream
joint venture (onshore LNG Plant). The Qatargas upstream joint venture
has equity held by QP (65%) and four major energy and trading companies,
TotalFinaElf (20%), ExxonMobil (10%), Mitsui (2.5%) and Marubeni (2.5%).
The Qatargas downstream joint venture has equity held by QP (65%),
TotalFinaElf (10%), ExxonMobil (10%), Mitsui (7.5%) and Marubeni (7.5%).
RasGas
is a $3.3 billion grassroots LNG venture owned by QP (63%), ExxonMobil
(25%), Kogas (5%), Itochu Corporation (4%), and LNG Japan Corporation
(3%). At present, RasGas has rights to produce and sell 10 million tons
of LNG per year and additional quantities of related hydrocarbon
products for a period of not less than 25 years. Production from RasGas’
first and second LNG trains began in June 1999 and April 2000
respectively. Each of the first two trains has a capacity of just over 3
mtpa.Two new Condensate Refining units with a daily capacity of 57,000 bpd, to refine condensate products coming from Phase One of the North Gas Field and from the Dukhan Arab-D project which was commissioned in July 1998.
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Qatar
Liquefied Natural Gas Company (Qatargas)
Qatar Liquefied Natural Gas Company II (Qatargas II)
In June 2002, QP and ExxonMobil announced the setting
up of a joint venture, provisionally referred to as Qatargas II, with
the primary aim of supplying up to 14 mtpa of LNG to the UK market. QP
and ExxonMobil have signed a HoA in this regard, reported to be the
world’s largest LNG contract. QP is reported to be interested in taking
a 70% equity stake in the venture, with ExxonMobil holding the balance
of 30%. Qatargas II was set up as part of Qatargas’ expansionary plans
to add trains 5 and 6 to its existing three trains and the planned train
4. The two new super-trains could each have a capacity as large as 7
mtpa, with the first train scheduled to start production in 2006/07 and
the second to commence in 2009.
Ras Laffan Liquefied
Natural Gas Company (RasGas)
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In October 2000, RasGas invited tenders for the
construction of the third and fourth LNG trains at its plant, each
having a capacity of 4 mtpa. In March 2001, RasGas II was formed to
execute the planned expansion. The third train is scheduled to come into
production in 2004 and the fourth train by 2005, bringing RasGas and
RasGas II’s anticipated LNG exports to around 13.4 mtpa by 2005.
November 2002 marked the sixth anniversary for Qatar as an LNG producer. Qatar has established itself as the Gulf’s leading gas exporter, delivering over 36 million tonnes of LNG to customers in the Far East, Europe and the US. In 2001, Qatar exported 12.8 million tons of LNG.
Ras Laffan Liquefied Natural Gas Company II (RasGas II)
An Emiri decree issued on 26th March 2001, announced the setting up Ras Laffan LNG Company II (RasGas II). The project is primarily aimed at providing Petronet of India with 7.5 mtpa of LNG.
RasGas II was created with a capital of QR 2 billion ($549.5 million), owned by QP (70%) and ExxonMobil (30%), with an option for Petronet to take up a 5% stake. In April 2001, RasGas II concluded the first phase of a sales and purchase agreement (SPA) with Petronet of India. The SPA, which covers a period of 25 years, involves the shipment of 5 mtpa to a terminal in Dahej (Gujarat, India) and 2.5 mtpa to a terminal in Cochin (Kerala, India), with shipments to start in December 2003. Qatar’s pricing advantages, favourable location and reserves were the determining factors in Petronet’s selection of RasGas/ExxonMobil over six other bidders.
In April 2001, RasGas II awarded the downstream EPC contract for the third LNG train, to a consortium consisting of Japan’s Chiyoda Corporation, Mitsui, Italy’s Snamprogetti and Qatari Almana Group. Completion of the third train is expected by 2004.
In June 2001, RasGas II signed a sales and purchase
agreement (SPA) for the supply of 3.5 mtpa of LNG to Italy’s Edison Gas
for 25 years. The consortium constructing the third train have options
in their successful bid, to build the fourth train, with deliveries to
Edison Gas slated to begin in 2005. The contract marked a very important
success in the company’s marketing efforts as negotiations for this deal
took over three years to conclude.
The Dolphin Project
The
Dolphin Project is the first export oriented pipeline project in the GCC
region and paves the way for the creation of a GCC gas grid originating
in Qatar. Promoted by the UAE Government’s Offsets Group (UOG), the
Dolphin project has already received outline commitments from UAE for up
to 2 billion cubic feet per day (cf/d) of gas. In June 2000, UOG
announced the formation of a company ‘Dolphin Energy Ltd’ (DEL), to
manage the project on its behalf. The ownership structure of the company
is 51% UOG and 24.5% each by TotalFinaElf and Occidental Petroleum.
France’s TotalFinaElf and Occidental of the US were selected as
strategic partners for the project, with TotalFinaElf responsible for
the upstream part of the project and Occidental for the midstream and
downstream marketing. Two upstream MoUs have been signed, one with
ExxonMobil and the other with TotalFinaElf.
The Dolphin Project is scheduled in two phases. The first phase of the project valued at $3.5 billion will involve production and distribution of 2 bn cf/d of gas, through a 350-km sub sea pipeline from Qatar’s North Field to Taweelah in Abu Dhabi and Jebel Ali in Dubai (Fig 3.4). Gas deliveries are set to start by the end of 2004.
The second phase of the project, still in its initial planning stages, will look at the possibility of further downstream operations involving Oman and other countries.
Enhanced Gas Utilisation (EGU) Project
An agreement to tap additional North Field gas for domestic projects and
regional exports was signed in early 2000 by QP and ExxonMobil Middle
East Gas Marketing Limited, a subsidiary of ExxonMobil Corporation.
Under the EGU Project, additional North Field gas
will be developed through a new upstream gas development, with power
generation (Ras Laffan IWPP) representing an initial major user.
ExxonMobil intends to extend the EGU Project through incremental
pipeline exports as well as Qatari industrial salecontracts.
Natural Gas
Liquids (NGL)
NGL-1 :
The first NGL plant commisioned in 1974, was established with the aim of utilising onshore associated gas from the Dukhan field. This facility provides for the NGL’s stripped from the Fahahil Plant (degassing, compressing and NGL stripping plant located along the Dukhan field) to be separated into ethane rich gas, propane, butane, and condensate.
NGL-2 :
The second NGL plant commissioned in 1980, was established with the aim of utilising offshore associated gas. This plant obtains NGL’s stripped from three offshore crude oil production platforms and separates it into methane rich gas, ethane rich gas, propane, butane, and condensate.
NGL-3 :
Also referred to as the North Field Gas Plant (NFGP), this plant was commissioned in 1991 and debottlenecked in 1997, to process an additional 240 mn cf/d of gas from Qatargas. The NFGP was originally designed to process raw gas and unstabilised condensate, separated from the North Field Alpha Offshore field.
NGL-4 :
The NGL-4 project is designed to increase the recovery of Natural Gas Liquids from the Dukhan Arab D reservoir and the North Field. The NGL-4 plant more than doubles QP’s NGL capacity and is dedicated both to export markets and to domestic demand which includes demand from the QAPCO and Q-Chem projects.
NGL-4 increases Qatar’s recovery of natural gas liquids from North Field Phase 1 of Ethane (875,000 tpa), Propane (735,000) and Butane (490,000 tpa) to meet growing demand for these products as a petrochemical feedstock.
Three NGL-4 related financings, each with a value of $400 million have been brought to market since the middle of 1999 and two financing programs have been successfully completed. QP has utilised innovative receivables backed structures, the latest utilising a ratings-enhanced commercial paper (CP) issue. QNB participated as arranger in the first two NGL-4 related financings.
Gas to Liquids Projects (GTL)
QP
continues to research other avenues for the utilisation of the country’s
natural gas resources.
Technologies for the direct conversion of natural gas into globally marketable and more easily transportable liquid products have evolved significantly in recent years and are of particular interest as a potential adjunct to direct exports of LNG and natural gas.
QP’s aim of progressing rapidly on GTL projects can be seen through the following Qatar GTL project, and five other projects which are at various levels of negotiation :
Qatar GTL Project:
In July 2001, QP and South Africa’s Sasol Synfuels International (Sasol) signed a joint venture agreement to develop a GTL project at Ras Laffan with estimated costs of $1 billion. EPC bids for the project were received in the fourth quarter of 2002 and the plant is likely to start production by the end of 2005
The project which is based on Sasol’s slurry phase distillate technology, will convert natural gas into 33,750 bpd of high grade fuels from two trains. The GTL plant will use as feedstock about 330 mn cf/d of gas from ExxonMobil’s enhanced gas utilisation (EGU) project, and is projected to produce around 24,000 bpd of high purity diesel, 9,000 bpd of naphtha and 1,000 bpd of LPG. An expanded output option could enable production to reach around 120,000 bpd by 2010. Exports from the project are destined for markets in the Far East and Europe.
ExxonMobil GTL Project:
ExxonMobil proposed a gas to liquids (GTL) project in June 2001. QP has signed a letter of intent with ExxonMobil for carrying out a technical feasibility study for the proposed project at Ras Laffan. The plant could have a capacity in excess of 80,000 bpd. Development costs for this integrated upstream/downstream project could exceed $2 billion.
Shell GTL Project: Shell has made proposals for a 140,000 bpd GTL plant and a letter of intent has been signed with QP in this respect. Senior officials from Shell reiterated their commitment in the project at the recently concluded ‘Gastech 2002’ conference in Doha, where it was noted that total project costs could exceed $4 billion.
Other Proposed GTL Projects: Among other proposed GTL
projects are Canadian company Ivanhoe Energy’s 185,000 bpd plant,
ConocoPhillips 50,000 bpd plant and Marathon Oil Company’s 80,000 bpd
plant.
Arab C Gas
Recycling
This proposed development is similar in nature to the recently-completed Arab D gas recycling project at onshore Dukhan. The project is aimed at recovering 36,000 bpd of condensate from 300 mn cf/d of wet gas, and is valued at $290 million.
Gas-Based and Other Industrial Projects:
In addition to its roles as the basis for the LNG industry, and as a fuel input for power generation, natural gas is utilised in a wide range of industries as a feedstock to produce various value-added products for both domestic consumption and export. These projects include the following:
Qatar Fertiliser
Company (QAFCO)
QAFCO
is a joint venture between Norsk Hydro of Norway and QP, who
respectively own 25% and 75% of the shares. It was established by an
Emiri Decree in 1969 to produce ammonia and urea. Currently the QAFCO
complex in Mesaieed comprises of three completely integrated trains;
QAFCO-1 (1973), QAFCO-2 (1979), and QAFCO-3 (1997), with each train
being made up of two units, one for the production of ammonia and the
other for urea.
Following the completion of the QR 2 billion QAFCO-3 project in March 1997, production capacity now stands at 3,800 tons per day (tpd) of ammonia and 4,500 tpd of urea. The company is now the largest producer of fertiliser in the Middle East, with total production reaching 1.4 million tons of ammonia and 1.7 million tons of urea in 2001 .
QAFCO currently exports ammonia and urea to more than 20 countries around the globe, and its main markets are in South East Asia, India, USA, Australia, and South Africa. In 2001, QAFCO exported 0.5 million tons of ammonia, and 1.6 million tons of urea.
QAFCO-4
In accordance with the State of Qatar’s policy to exploit the nation’s huge natural gas reserves and expand its industrial base, and to keep up with Qatar Fertiliser Company’s modernisation policy, the ‘QAFCO IV’ expansion project was launched in 2000. Project costs are in excess of $500 million, and the project will add 2,000 tpd of ammonia and 3,200 tpd of urea to existing capacity. On completion in 2004, QAFCO’s production capacity will rise to 2.8 mtpa of urea and 2 mtpa of ammonia, making the company the world’s largest fertiliser producer from a single site. The EPC contract was awarded in July 2001 to Krupp Uhde of Germany.
Qatar Fuel Additives Company (QAFAC)
QAFAC
is owned by QP (50%), Chinese Petroleum Corporation (20%), Lee Chang
Yung Chemical Industry Corporation (15%) and International Octane Ltd.
of Canada (15%). QAFAC’s plant in Mesaieed has a production capacity of
620,000 tpa of Methyl Tertiary Butyl Ether (MTBE), and 950,000 tpa of
methanol.
Total project development costs were in the vicinity
of $650 million, with a project finance package of $350 million being
put into place. The plant started methanol and MTBE production
respectively in June and July 1999. The first shipment was exported to
Canada in August 1999. Production volumes are now running close to
capacity. In 2001, QAFAC produced 911,860 tons of methanol and 505,591
tons of MTBE. In May 2002, an agreement was signed with Iran for the
supply of 275,000 tons of MTBE over a seven-year period, commencing from
July 2003.
Qatar Petrochemical Company (QAPCO)
QP
owns 80% of QAPCO with the remaining capital of 20% held by Atofina
(Chemical arm of France’s TotalFinaElf). QAPCO commenced full commercial
operations in 1981 and produces high quality Ethylene, Low Density
Polyethylene (LDPE) and Sulphur. QAPCO’s QR 1.4 billion expansion
project which was completed in 1996, raised production capacity of
Ethylene from 330,000 tons per annum (tpa) to 550,000 tpa.
In 2001, QAPCO recorded a 17% increase in profits to QR 497 million ($137 million).
QAPCO has conducted a feasibility study for the
debottlenecking of the existing ethane cracker plant, so as to further
increase the capacity from the current 550,000 tpa to 720,000 tpa. The
project is scheduled for a 2004 completion. Debottlenecking of the LDPE
line, has led to an increase in the production capacity from the 275,000
tpa to 390,000 tpa. This expansion has confirmed QAPCO’s status as the
largest producer of LDPE in the Middle East.
Qatar Vinyl
Company (QVC)
QVC
is a joint venture between QAPCO (31.9%), QP (25.5%), Norsk Hydro of
Norway (29.7%) and Atofina of France (12.9%). Krupp Uhde of Germany were
responsible for construction of the core process unit of the plant,
while Italy’s Technip covered the development of a 130MW-power
generation facility.
The project (70% or $475 million) was financed through a syndicated limited recourse loan lead-arranged by BNP Paribas, Credit Suisse First Boston and Arab Petroleum Investment Corporation, with other arrangers. The project was formally opened by HH the Emir Sheikh Hamad Bin Khalifa Al-Thani on June 21st 2001. The $680 million project has a capacity to produce 180,000 tpa of Ethylene Dichloride (EDC), 230,000 tpa of Vinyl Chloride Monomer (VCM) and 290,000 tpa of Caustic Soda. Production of EDC and Caustic Soda began in April 2001, with VCM production starting in June 2001. QAPCO provides the Ethylene feedstock and also supplies facilities to the company through horizontal integration.
QAPCO, Norsk Hydro and Elf Atochem share marketing responsibilities with respect to QVC’s production. South East Asia and Australia buy a large part of QVC’s production.
QVC is closely examining a proposal for expanding facilities and also for the setting up of a plant to manufacture polyvinyl chloride (PVC).
Qatar Chemical
Company (Q-Chem)
In
November 1997, QP (with a 51% interest) and Chevron Phillips Chemical
Company (with a 49% interest) signed a joint venture agreement to
construct a petrochemical complex, called Qatar Chemical Company (Q-Chem),
in the Mesaieed industrial area.
Construction of the $1.2 billion, 500,000 tpa ethylene cracker plant commenced during 1999. The plant which is currently in production testing (November 2002), obtains Ethane and Butane feedstock from the NGL-4 facility. The Ethylene is fully converted into 273,000 t/y of High-Density Polyethylene (HDPE), 189,000 t/y of Low-Density Polyethylene (LDPE), and 47,000 t/y of Hexane-1. Q-Chem signed a $750 million financing agreement with nine international and regional banks (including QNB) in July 1999. A consortium of Kellogg Brown & Root and Technip constructed the plant. Kellogg Brown & Root supplied the Ethylene technology, and Phillips the Hexane-1 and Polyethylene technology.
Qatar Chemical Company II (Q-Chem II)
Qatar Petroleum, with a 51% stake and Chevron Philips Chemical Company (CPC) with a 49% stake are partners in this joint-venture, which will see the construction of a ‘world-scale’ high density polyethylene (HDPE) and olefins plant, adjacent to the Q-Chem plant in Mesaieed. The ethane feedstock for the project will be sourced from the Ras Laffan Ethylene Cracker project, which will be fed with natural gas from the North Field. The project is estimated to cost well in excess of $1 billion, with a production capacity estimated at around 1.2 mtpa. The financial advisor for the project is Royal Bank of Scotland. The project is scheduled for completion by 2007.
Qatofin
This is a joint venture between QAPCO (63%), Atofina
(36%) and QP (1%), which will see the establishment of a Linear Low
Density Polyethylene (LLDPE) plant with a 450,000 tpa capacity. The
plant will be located in Mesaieed, adjacent to the QAPCO facilities. The
ethane feedstock for the plant will be supplied from the Ras Laffan
Ethylene Cracker project. The financial advisory contract for the
project has recently been awarded to HSBC.
Ras Laffan
Ethylene Cracker (RLEC)
This venture between Q-Chem II (53.31%), Qatofin (45.69%) and QP (1%), is primarily set up with the aim of supplying the Q-Chem II and Qatofin projects with ethylene feedstock. The ethylene cracker unit will be located at Ras Laffan and the ethylene feedstock will be transported via pipeline to Q-Chem II and Qatofin in Mesaieed.
Qatar Petroleum
Refinery (formerly NODCO)
The Qatar Petroleum Refinery, formerly called The National Oil Distribution Company (NODCO), was set up in 1968, primarily with the aim of realising self-sufficiency for Qatar in refined products in addition to providing surplus production for export to world markets. In 1999, an expansion project (NODCO-3) was initiated at an estimated cost of $850 million. The expansion project upgraded the company’s facilities and raised its refining capacity from 60,000 bpd to 137,000 bpd with a 27,000 bpd condensate processing unit.
The expanded facilities were officially inaugurated by HH the Emir Sheikh Hamad Bin Khalifa Al-Thani on January 12th 2002. The expansion incorporates the following elements:
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De-bottlenecking of the refining capacity of the existing units from 62,000 bpd to 80,000 bpd.
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The construction of a Fluid Catalytic Cracking Unit to convert fuel oil into lighter products.
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Upgrading the instrument control & information systems of all the company’s production facilities.
Infrastructure Projects -
Ras Abu Fontas B (RAF-B)
The existing Ras Abu Fontas B station has a capacity of 990 MW of power and 33 million gallons of water a day. In November 2000, Qatar General Electricity and Water Company entered into a major contract with Alstom Power to install three additional gas turbines which provided an additional 380 MW to Qatar’s power grid. A Project-Finance package of $160 million was put in place in July 2001.
The second-phase of the expansion could involve the
addition of 27-30 million gallons a day of desalination capacity and the
installation of waste heat recovery boilers.
Ras Laffan
Independent Water and Power Project (IWPP)
The Ras Laffan Independent Water and Power Project (IWPP) is Qatar’s first power project developed on the build-own-operate-transfer (BOOT) basis and will meet the rising domestic and industrial demand for power and water. The plant will produce 750 MW of power and 40 million gallons of water a day.
AES of the US was awarded the developer role for initiation of the project as an IPP. The Ras Laffan Power Company (RLPC) was formed in August 2001, as a holding company to undertake the project, in which AES owns a 55% share, Qatar Petroleum 10%, Qatar Electricity and Water Company 25%, and Gulf Investment Corporation 10%. The Qatar Electricity and Water Corporation (Kahramaa) will purchase power from the plant, under a long-term purchase agreement. QP will provide the gas feedstock for the plant and build a common cooling-water facility. Italy’s Enelpower and Fisia Italimpianti will build the plant, which is anticipated to be fully operational by May 2004. A $572 million financing package for the project was finalised in November 2001.
Demand for electricity in Qatar has increased from 72 MW in 1971 to 1,479 MW in 1997, while demand for water has grown from 3 million cubic meters (mcm) to 120 mcm during the same period. Electricity demand is forecast to reach 3,300 MW by year 2005 and 3,800 MW by year 2010.
Doha
International Airport
The
New Doha International Airport project is estimated to cost over $500
million, and involves the construction of new terminal facilities some
six kilometers east of the present facilities. International contractors
have already been invited to prequalify for the contract. The project
received a $55 million allocation in the 01/02 State Budget and
another $57 million allocation in the recent 02/03 State Budget. A new
committee has been set up to speed up the implementation process in
order to get the new airport to open before the Asian Games in Doha in
2006.
Friendship Bridge
A proposed bridge, referred to as the ‘Friendship
Bridge’ will link Qatar and Bahrain via a 45-kilometre causeway - the
world’s longest fixed link. A Danish consortium headed by renowned
engineering consultants Cowi, has recently completed a feasibility
study.
Health, Education
and Tourism Projects
Al-Ahli Private Hospital
The Al-Ahli Hospital is Qatar’s first major private
hospital and on completion will be one of the biggest private hospitals
in the Gulf. A $60 million financing package for the project was
arranged in 1999 with QNB being the Lead Arranger. The 250 bed hospital
will also have an accommodation block for staff, and is scheduled to
open in the first quarter of 2003.
Education City
The
proposed ‘education city’ is to be set up under the aegis of the Qatar
Foundation for Education, Science and Community Development, which was
established in 1995 by HH the Emir Sheikh Hamad Bin Khalifa Al-Thani.
The facility will include higher educational institutions at the
university level, specialised training in design arts and languages, and
sporting facilities.
In April 2001 a landmark in higher education standards was set, when the Qatar Foundation signed an agreement with New York based Cornell University, for establishing a new medical college in Doha. The proposed ‘Weill Cornell Medical College Qatar’ is to be built as part of the upcoming ‘education city’ in Doha, and is due for completion by 2004, although classes have started in October 2002 at a temporary facility.
The ‘education city’ will have the Medical College as its central feature and the college will have an estimated operating cost of around $750 million in the first 10 years. There is also a proposal to set up a hospital with a 250-300 bed capacity, along with the medical college.
Further in June 2001, Qatar signed a memorandum of understanding (MOU) with two leading Canadian educational institutions, College of North Atlantic (CNA), and the Canadian Bureau of International Education (CBIE) for the establishment of a world class college of technology in Qatar. Both colleges will be part of the ‘education city’. In October 2001, a ten-year comprehensive agreement was signed between the College of North Atlantic and their Qatari counterparts. The College of North Atlantic officially started its first academic year in October 2002, at a temporary facility.
A 45-hectare science park is also planned as part of
future development at the ‘education city’.
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Hotels
The
opening of the Inter-Continental Doha, in November 2000, and the
Ritz-Carlton Doha in October 2001, saw the injection of an additional
40% capacity to the luxury hotels sector. The latest international hotel
chain to set up operations in Qatar, is the Movenpick, which opened in
January 2002, with a capacity of 154-executive class rooms.
Four other new hotel properties, to be managed by
major international hotels groups, are under development, which will
increase current capacity by an additional 836 rooms. The largest
development among these is the Four Seasons. Other names include the
Holiday Inn, Rydges Plaza Doha, and Doha Hilton.
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