Qapco chief eyes future

Qatar boasts great reserves of oil and natural gas, and Qapco is playing a huge part in the development of the petrochemical and wider downstream industry in the country through the best utilisation of the associated and non-associated ethane gas, which is plentiful in Qatar through oil production and the processing of natural gas.

Qatar Petroleum has the responsibility for distributing feed-gas to various consumers in Qatar, of which we are one. 

The ethane feedstock to Qapco is currently sourced from onshore oil fields, offshore oil fields and the giant north gas field sources, through the three NGL plants, NGL-1, 2 and NGL-4.

Qapco’s gas processing facilities consist of recovering ethane from Stripped Associated Gas (SAG) and Ethane Rich Gas (ERG). Qapco receives enough ethane feedstock for the production of ethylene at its maximum capacity. Thanks to the huge reservoir of natural gas available in the North Field, looking to the future, we do not expect any shortfall in the feed supply.

The current progress on North Field natural gas development, projects at Ras Laffan, including the Dolphin project, and Al Khaleej EGU project (AKG), GTL projects, and NGL plants means there is plenty of ethane available for Qatar’s downstream and petrochemical industries.

What are Qapco’s main challenges?

Like most other industries, the petrochemical sector has many challenges ahead. Above all, it is the current global financial crisis that has hit the world markets and caused the economic slow down. One optimistic aspect of the current crisis is that the petrochemical industry is cyclical in nature, and we will emerge brighter.

The down cycle was expected any time, having sustained wonderful operations and high profits over the past five to six years, and it is just a coincidence that it came along with the financial crisis. As such, the industry, to some extent, was prepared for a situation like this. 

The second positive aspect is that Middle East Industry is still the most economical producer of ethylene and polyethylene in the world due to the huge benefit available to it on account of feed gas cost advantage. However, this advantage is shrinking day by day as a result of declining Naphtha prices.

However, ethane based producers will continue to have the upper hand over naphtha producers due to the independence from crude oil prices.  Even in the worst case scenario, they have the capacity to survive.

Qapco is doing its utmost to cope with this crisis and to secure immediate solutions for any anticipated challenges, which are diversified and complex and require an in depth long term strategic plan.

Do concerns remain about the scarcity of appropriately qualified people in the Gulf region?

For the Gulf region, securing the national human resources and manpower to work in the oil and gas sector has long been a top priority.  In this regard, Qatar has adopted a serious policy to prepare its local work force to meet the demand and challenges of the oil and gas sector. Qapco, as a national company, is paying due attention for the intake, training and development of Qatari nationals on priority basis.

Qatari nationals are being employed either directly on number of key managerial, operational, and administrative positions or recruited as trainees, to be placed later on after completing the effective training programmes.

We firmly believe that planned and effective development of resources is a very important activity and therefore constantly making every effort by committing ourselves to attain all our HR goals.

Is Qapco investing abroad?

Qapco is the subsidiary company of Qatar Petroleum, and as such all of its major investment decisions are based on the guidance from Qatar Petroleum. For the time being, Qapco has no investments abroad, and is mostly focused on local development. We are also encouraging and supporting the private sector to invest in

small and medium-sized downstream petrochemical projects. We are working towards creating prospective investment opportunities, through setting up industrial units or factories, to convert polyethylene into different applications and end-user products in the State.

What is Qapco’s greatest strength?

 Our greatest strength lies in having built a world-class reputation and a pioneering competitive position through a strong presence in the world’s markets as a leading producer of LDPE. Qapco enjoys unique advantages which revolve around three major factors; high quality products, reasonable prices and distinguished customer services.

Besides this, Qapco is committed to excellence in all these areas, and our goals are to establish a global marketing network that includes operating new offices and warehouses across different global territories, thereby offering our services to our customers at their door, essentially becoming a local supplier.  Such advantages gave us a significant edge over other international competitors.

What is Qapco’s strategy to deal with the financial crisis?

The financial crisis has hit everybody. It started with real estate, then banks, and huge financial institutions. When it hit the petrochemical sector we were already planning for it.

We have a five year strategy plan for the company, and we know how to manage and adapt to the situation.

Whether prices go up or down, we have a clear mission and vision of the company which enables us to act immediately. Ensuring that investment stays strong, and control of cost remains tight are key areas for focus, naturally.
As a subsidiary of Qatar Petroleum, which has its its own five to ten year strategy, Qapco acts as part of a bigger vision, and that has shaped our reaction in terms of the global financial crisis.

The problem hit at the end of October, and at that time everybody was panicking about what to do. We weren’t. We were prepared earlier and we have our own marketing network so we could control the products and sell it at a good prices.

We have the capability to produce at maximum capacity even in these tough times, and that is what we managed last year. The worst shock to the market persisted for about five to six weeks, during which we were still able to produce at full capacity. The design of the ethylene plant is geared to 725 000 tonnes per annum, and we produced 800 000 tonnes of ethylene last year, and we manufactured more LDPE 1 and LDPE 2, which we were still able to sell.

Just today we had a request of polyethylene from clients in the region who want our product, but we are limited as it is all sold out.

2008 will be remembered as a historic year. Prices were exaggerated in some areas for sure. For PE to reach $2000 is an exaggerated figure,  but we were there and anybody who wanted to buy it we sold to. I believe that after June,  July prices will stabilise and gradually improve.

The cycle will be closed in few years. We’ve seen this historical peak and trough before when the oil reached $10 a barrel. What is happening now is no different in the wider context of the industry norms. You can’t say I always want to be on the top, somedays are bound to be a little down.

Will Qapco diversify into Propylene?

Qapco is producer of ethylene and polyethylene, and by July Qapco will produce LLDPE in a JV company with Qatofin. Polystyrene and polypropylene are not in our agenda.

We are concentrating on those three core products. Achieving the quality we are looking for, and maintaining this is what makes Qapco a good company.

Will Qapco be acquiring companies outside Qatar?

As a subsidiary of QP, that is their overall decision. When they green light a move, we are ready. But for now Qapco is in Qatar.

What’s the status of your projects?

We have three ongoing projects. The QATOFIN project, in partnership with France’s Total, and Qatar Petroleum is progressing very well, and we are expecting to start the cracking machine of the LLDPE plant in July.

This will produce 450 000 tonnes per year. In line with this, we expect to start commercial operations this November.

The Ras Laffan plant that will supply the ethylene feedstock to Qatofin will start in November or December this year. Around 1.3 million tonnes of ethylene will come
via pipeline to Mesaieed, where it will be distributed to Qapco and to Q-Chem.

With regard to the third LDPE project, we have received all the bids and we will be awarding that contract soon.