Qatar's $25bn decade of petrochemicals

Qatar looks to increase its petrochemical, polymer and fertilizer production levels to 23mn tonnes per year

The Qatari government has pledged $25bn by 2020.
The Qatari government has pledged $25bn by 2020.

As Qatar looks to increase its petrochemical, polymer and fertilizer production levels to 23mn tonnes per year, we look at how the country’s marketing and distribution firm is meeting the challenges of increasing global exports in the downstream sector.

Thanks to the gargantuan gas reserves found in its North Field, Qatar has made itself the wealthiest country in the world, on a per capita basis.

Like other producers in the region, Qatar is looking to diversify its economy away from over reliance on unrefined hydrocarbon exports. Many countries are beginning to increase their export portfolio of higher value refined products, and Qatar is no exception.

The Qatari government has recently pledged $25bn of investment in its downstream hydrocarbon sector by 2020. With that investment comes some lofty ambitions for the Gulf state producer. Qatar aims to increase its production of petrochemicals, polymers and fertilizers from its current 10mn tonnes per annum, to an ambitious 23mn tonnes per year by 2020.

Such is the strength of Qatar’s focus further down the value chain that some Qatari experts are dubbing the coming decade as the ‘Chemical and Petrochemical decade for Qatar’.

In order for Qatar to achieve these ambitious targets, significant challenges will need to be overcome. Increasing production levels will require highly specialised and skilled technical personnel. Somewhat ironically, securing sufficient feedstock in the face of Qatar’s current natural gas moratorium could also raise difficulties.

The biggest challenge of all will be ensuring that logistics are in place, not only to produce the refined products, but also to adequately market and distribute them to a growing global client base.

The Qatar Chemical and Petrochemical Marketing and Distribution Company (Muntajat) was formed in 2012 by the Qatari government. As the sole marketer, distributor and seller of Qatar’s refined products, Qatar’s economic success is to some extent dependent upon the success of Muntajat.

Since its launch in 2012, Muntajat has experienced rapid growth and has quickly become a regional and global player in the chemical and petrochemical industry.

“In 2013 alone, Muntajat managed to ship around 8 million tonnes of chemicals, polymers and fertilizers to more than 120 countries around the world. This year, we are on target to reach 10 million tonnes. On top of that, we have managed to transition 90% of Qatar’s production to our portfolio and are looking to complete the full transition by the end of 2014,” said Muntajat’s CEO Abdulrahman Ali Al-Abdulla.

These are impressive achievements for a company that has yet to reach its second anniversary. Muntajat has benefited heavily from the Qatari government’s pledge to spend $25bn on its downstream sector.

There are a number of large scale projects underway which will significantly strengthen Muntajat’s hand over the coming years.

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The Al-Sejeel and Al-Karaana petrochemical projects will more than double Qatar’s annual petrochemical production to 23 million tonnes by 2020.

The Al-Sejeel project is scheduled for completion in 2018 and accounts for $5.5bn of the $25bn Qatar plans to spend by 2020. The complex will feature one of the world’s largest mixed-feed steam crackers, and is designed to produce 2.2 million MTPA of polymers, including polyethylene and polypropylene resins.

The Al-Karaana petrochemical project will cost around $6.5bn to complete. Its monoethylene glycol unit will have a capacity of 1.5 million tonnes per year. The project involves the construction of two gas processing trains, each with a capacity of 750,000 tonnes per year.

These projects will dramatically increase Qatar’s petrochemical output, which in turn will drive down the price of Qatari refined products. As profit margins shrink and global petrochemical markets become increasingly competitive, the availability of cheap, abundant products will be a powerful weapon in Muntajat’s arsenal.

Qatar is also in the process of developing one of the world’s largest greenfield port development, which will be equipped to handle the world’s largest tankers. With the US emerging as a key competitor for Asian markets, the new ports will be Qatar’s lifeline to their customers in the Far East.

Muntajat has signed a two year contract to lease the LPG carrier The Almarona from Milaha. The deal will see Muntajat take sole use of the 23,000 cubic metre capacity gas carrier specifically for exports to the Far East.
Qatar’s ability to hit its target of 23mn tonnes of petrochemical and fertilizer exports will rest squarely on the shoulders of the successful completion of these projects, leaving little room for error. Al-Abdulla remains optimistic about the projects’ progress in Qatar.

“These new projects will broaden Muntajat’s portfolio and position Qatar in a more competitive position when it comes to production volume. Muntajat will play a critical role in the marketing, sales and distribution of the products of each of the new projects once complete. We are developing our global marketing and distribution capabilities in line with the capacity growth to ensure the ability to deliver as these new projects come online,” he explains.

One of Muntajat’s key challenges has been developing new markets for Qatar’s increased production of petrochemicals, polymers and fertilizers. This year has seen the company opening new offices in Amman, Melbourne, Cape Town, Kuala Lumpur and Istanbul in an attempt to reach out and develop new markets.

In late 2014 Muntajat will also open an international marketing headquarters in The Hague, Holland, as well as 11 additional global marketing offices around the world. It is intended that these offices will serve more than 40 markets around the world.

“The international outlook for the industry is positive and challenging at the same time. We are closely monitoring the US and Chinese markets as they develop their production capabilities. The US with shale gas and China with coal, but we still believe that Qatar and the Middle East will continue to have the feedstock advantage due to the abundance of oil and gas reserves,” he says.

“We also foresee continuous growth for polymers. As the quality of life improves around the world, especially in Africa and Asia, it will continue to have a positive impact on the consumption of plastics and packaging,” Al-Abdulla explains.

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Inevitably, strong growth in demand for petrochemicals is coming from Asian markets as India and China continue to ramp up their production levels of plastic based products.

“India and China are the world’s manufacturers, and therefore where the products made by Qatar’s producing entities are most in demand.”

However, Muntajat is forecasting an increase in demand across its product range. Significant growth is expected in demand for fertilizers as developing markets look to increase and secure their food supply. To capitalise on these opportunities and meet the global growing demand, Muntajat is focused on building its global reach by establishing its network of offices in key markets.

Qatar’s National Vision 2030 calls for a sustainable and prosperous future for its citizens. Part and parcel of this drive will be increasing the number of Qatari nationals who are employed by its key industries. The refining and petrochemicals sector will be no exception, and Muntajat has plans in place to invest in the training and development of its staff.

“The Qatari National Vision 2030 is about economic, human, social and environmental development. As a global business, we are of course contributing to the economic development of the State, particularly as it diversifies beyond oil and gas. But we see our contributions going much deeper than purely economic measures. Developing national human capital is an important area of focus for Muntajat.”

Muntajat has developed the Muntajat Integrating Nationals Development (MIND) programme which caters to recent graduates looking to enter the downstream industry.

“For decades, Qatar has been home to a thriving chemicals and petrochemicals sector, qualifying talented individuals with local and global expertise. Muntajat is the success it is today because of our commitment to bring together global and local expertise, a roadmap we will continue to follow in the future,” notes Al-Abdulla.

At a senior level, Muntajat is comprised of 60% Qatari nationals. Across the company Qatarization has reached a total of 22% for all employees.

As Qatar continues to sharpen its focus on high value, refined products, Muntajat will be crucial to its success. Al-Abdulah remains upbeat about Qatar’s ability to deliver on its ambitious targets.

“What we know is that the global petrochemicals market remains strong and Qatar has a well-respected, long-standing history of successful products and a very loyal customer base. The establishment of Muntajat grants Qatar a more competitive position through new efficiencies and scale. Muntajat welcomes regional and international competitions. We believe it drives greater quality of service,” he says.

Factbox:
- 10 million tons per year Qatar’s 2014 petrochemical output
- 23 million tons per year Qatar’s 2023 projected petrochemical output

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