Qatar and Royal Dutch Shell to jointly develop a $6.5-billion (U.S.) petrochemicals complex

Qatar and Royal Dutch Shell PLC signed a tentative deal Sunday to jointly develop a $6.5-billion (U.S.) petrochemicals complex, giving government-run Qatar Petroleum an 80-per-cent stake in the facility being built in Ras Laffan Industrial City in the north of Qatar. Shell will hold the remaining 20 per cent.

The plant aims to turn Qatar’s vast natural gas reserves into petrochemical products that the companies expect to sell mainly to fast-growing Asian markets. Qatar sits atop the world’s third-largest natural gas reserves, and exports more liquefied natural gas than any other country.

Qatar’s Energy Minister, Mohammed bin Saleh Al-Sada, said the Shell project is part of the OPEC member’s strategy of building its chemicals industry “and represents an important milestone on our journey to become a significant global petrochemicals producer.”

The plant aims to produce up to 1.5 million tons of mono-ethylene glycol, which is commonly used in antifreeze products, and 300,000 tons of the industrial chemicals known as linear alpha olefins per year.

Al-Sada estimated the project will cost roughly $6.5-billion, though he cautioned that the final figure be different. He said the project is due to begin operation in 2017.
Shell and Qatar Petroleum signed a lower-level agreement to explore the possibility of the petrochemicals project last December.

Qatar’s ruler last month inaugurated Shell’s Pearl Gas-to-Liquids plant near the proposed petrochemical plant site to convert natural gas into liquid fuel. The Anglo-Dutch oil major also partners with Qatar Petroleum on a liquefied natural gas plant nearby.