QatarEnergy and Chevron Phillips Chemical sign $6bn petrochemicals deal

The project includes an ethane cracker and two high-density polyethylene derivative units

Saad Al Kaabi, right, and Bruce Chinn sign the deal at the QatarEnergy headquarters in Doha. AFP
Powered by automated translation

QatarEnergy announced on Sunday the decision to proceed with the $6 billion Ras Laffan Petrochemicals Complex with partner Chevron Phillips Chemical.

An agreement marking the final investment decision for the project was signed by Saad Al Kaabi, the Minister of State for Energy Affairs, the president and chief executive of QatarEnergy, and Bruce Chinn, president and chief executive of Chevron Phillips Chemical in Doha.

The companies created a joint venture, Ras Laffan Petrochemicals, in which QatarEnergy will hold a 70 per cent share and Chevron Phillips Chemical 30 per cent, under the agreement signed on Sunday.

“This marks QatarEnergy’s largest investment ever in Qatar’s petrochemicals sector and the first direct investment in 12 years. It will double our ethylene production capacity and increase our local polymer production from 2.6 to more than 4 million tons per annum and place the utmost emphasis on sustainable growth and the environment,” Mr Al Kaabi said.

The complex, expected to begin production in 2026, includes an ethane cracker with a capacity of 2.1 million tonnes of ethylene per year, making it the largest ethane cracker in the Middle East and one of the largest in the world, QatarEnergy said.

The integrated complex will also include two high density polyethylene derivative units with a total production capacity of 1.7 million tonnes per year.

Qatar, one of the world's top producers of liquified natural gas (LNG), will see its ethylene production capacity double on the back of the new complex. Local polymer production will also increase from 2.6 million to 4 million tonnes per annum.

Originally announced in 2019, the project highlights how Middle East oil producers are expanding further into petrochemicals, used in the production of plastics and packaging materials, to move into new markets and find new sources of income beyond exporting crude oil and natural gas.

“There is no doubt that this cornerstone investment in Ras Laffan Industrial City marks an important milestone in QatarEnergy’s downstream expansion strategy. It will not only facilitate further expansion in the downstream and petrochemical sectors in Qatar, but will also reinforce our integrated position as a major global player in the upstream, LNG, and downstream sectors,” Mr Al Kaabi said.

Chevron Phillips Chemical will provide project management services. Construction began with early works at the site in June, and start-up is expected in late 2026.

The engineering, procurement and construction of the ethane cracker will be executed by a joint venture between Samsung Engineering and CTCI Corporation. Tecnimont will execute engineering, procurement and construction for the polyethylene units, the statement said.

The polyethylene units will use Chevron Phillips Chemical’s MarTech loop slurry process to produce high-density polyethylene, which will primarily be exported from Qatar.

Polyethylene is used in the production of durable goods like pipe for natural gas and water delivery and recreational products such as kayaks and coolers. It is also used in packaging applications to protect and preserve food and keep medical supplies sterile.

The facility will be constructed with modern, energy-saving technology and use ethane for feedstock, which along with other measures, is expected to result in lower greenhouse gas emissions than similar global facilities.

“At Chevron Phillips Chemical, we continue to grow our global asset base where there is access to reliable, affordable feedstock. This investment will help meet global demand for polyethylene products,” Mr Chinn said.

Attending the signing ceremony were senior executives from QatarEnergy, Chevron Phillips Chemical and its owner companies, Chevron USA Inc and Phillips 66.

Chevron Phillips Chemical and QatarEnergy operate joint ventures in Qatar and recently announced construction of a similar integrated polymers facility in Orange, Texas.

Updated: January 09, 2023, 3:22 AM