QChem II Integrated Petroleum Complex, Mesaieed Industrial, Qatar

With the world's thirst for chemicals and materials derived from crude oil, the Gulf states are a hotbed of construction activity increasing their production capacity.

A project which is now approaching completion, having been started in 2005, is the Q-Chem II project.

It is an expansion of the Q-Chem complex that was launched in May 1997 in Mesaieed Industrial City (MIC) to produce a range of petrochemicals, including sulphur (36,000mtpa), ethylene (500,000mtpa), 1-hexene (47,000mtpa) and high density polyethylenes (453,000mtpa).

The new Q-Chem II is currently being completed on an adjacent site and is expected to be on-stream by the third or fourth quarter of 2008.

OWNERS AND OPERATORS

The two companies involved in the Q-Chem II venture are Qatar Petroleum (QP) (previously the Qatar General Petroleum Company) and Chevron Phillips Chemical Company LLC (Chevron Phillips Chemical). The Q-Chem II project is being mediated by Qatar Chemical Company II Ltd (Q-Chem II), which is a joint venture set up between Qatar Petroleum (51%) and Chevron Phillips Chemical International Qatar Holdings LLC (49%). This company is a wholly owned subsidiary of Chevron Phillips Chemical.

Q-CHEM II

The Q-Chem II Project includes a new 350,000mtpa high-density polyethylene plant and a 345,000mtpa normal alpha olefins plant. Both of the new plants will use Chevron Phillips Chemical's proprietary technologies for their production.

Another aspect of the Q-Chem II project is a joint venture (Ras Laffan Olefins Company Ltd) to develop a 1.3 million mtpa ethylene cracker in the Ras Laffan Industrial City. The second phase will see capacity increased to 1.6 million mtpa, making it one of the largest in the world.

The Q-Chem II companies will have a 53.85% capacity share of the ethylene cracker. The additional capacity of the ethylene cracker will be owned by Qatofin, which is a venture between Qatar Petroleum (1%), Qatar Petrochemical Company Ltd (QAPCO) (63%) (Qatar Petroleum owns 56% of QAPCO), and Total Petrochemicals (36%).

The new ethylene cracker will be able to provide feedstock via a new 120km-long pipeline to the Q-Chem II complex and to Qatofin's new 450,000mtpa linear-low-density polyethylene unit (llDPE).

The latter will use Unipol's technology licensed from Univation and is also situated in MIC. Any further excess of ethylene feedstock will be passed to the Qatar Vinyl Company in MIC.

The scheduled start-up of the Q-Chem II units, the ethylene cracker, and the Qatofin unit is expected in late 2008.

FINANCE

The $1.1bn finance for the Q-Chem II project and its related share of the Ras Laffan ethylene cracker is being provided by the Export-Import Bank of the United States, a group of international commercial banks and equity capital from Chevron Phillips Chemical and Qatar Petroleum.

CONSTRUCTION

The engineering, procurement, and construction (EPC) contract for the Q-Chem II project was awarded to a consortium of TECNIMONT S.p.A. and Daewoo Engineering & Construction Co., Ltd in 2005. Flexcrete is providing a special concrete coating for the plants.

The construction (EPC) of the ethylene cracker is being carried out by Technip of France. Construction was started properly in June 2006. Punj Lloyd of India won the $45m contract to construct the pipeline in April 2007 and this is expected to be completed by April 2008.