Khalifa Al-Sowaidi , managing director of Qafco says Qatar’s abundance of gas puts his company ahead of its competitors.
Competition between fertiliser producers in the GCC is intensifying, and the fertiliser arena in the region is set
to witness changes in the next few years. Qatar Fertiliser Company (Qafco) starts its fifth expansion project, Qafco 5 during the first quarter 2011, followed by Qafco 6 by 2013.
The new project will cement the top position for Qafco as the global leader of the urea and ammonia fertiliser industry. “Currently, we produce 3 million tonnes per year (t/y) of urea and 2 million t/y of ammonia,” Khalifa Al-Sowaidi , general manager of Qafco tells Refining and Petrochemicals Middle East.
The company has tailored its strategic scientific plans, made qualitative achievements in terms of enhancing production capacity, production volume and competitive quality of its products.
“These achievements brought Qafco to the top spot as the largest ammonia and urea producer and exporter in the world, especially after the completion of Qafco 4, which made the company the largest single producer of urea with an annual production capacity of 3 million tonnes in addition to its production of 2 million tonnes of ammonia annually,” explains Al-Sowaidi.
The company currently operates four urea trains and four ammonia trains, and is expected to increase its total operational trains to two for ammonia and another one for urea when it completes Qafco5.
“Qafco inaugurated its very first plant and production units in 1973 with a daily design capacity of 900 tonnes of ammonia and 1000 tonnes of urea. At present, Qafco’s complex contains four trains: Qafco 1 (1973), Qafco 2 (1979), Qafco 3 ((1997) and Qafco 4 (2004). Each train consists of two production lines, one for producing urea and the other for ammonia,” says Al-Sowaidi.
Qafco operates four plants to produce ammonia with a total consolidated capacity of more than 2 million metric tonnes annually. The company utilises most of its production of ammonia to produce urea and the surplus is sent for export.
With regards to urea, Qafco produces it in two forms, granules and prills. “Qafco’s relatively old plants (Qafco 1 and Qafco 2) produce the prilled urea whereas the most recent plants (Qafco 3 and Qafco 4) produce granular urea,” explains Al-Sowaidi.
Qafco works on expanding granular urea production instead of prilled urea because the fertilisers in granular form are more suitable for modern agricultural techniques being adopted in developed countries.
“Qafco’s production at present of prilled urea is around 930 000 metric tonnes paralleled by 2.070 million metric tonnes of granular urea,” reveals Al-Sowaidi.
The company is also planning on finalising two expansion projects: Qafco 5 and Qafco 6. “With the completion of Qafco 5 in 2011 the overall annual production capacity of the company will nearly jump to 3.6 million tonnes of ammonia and 4.2 million tonnes of urea.
At this level, Qafco will become the world’s largest single site producer of ammonia and urea after it occupied the position of biggest producer of urea with the completion of Qafco 4 in 2004,” he notes.
“The completion of Qafco 6 in 2012 will mark an unprecedented event with regard to the company’s production capacity of urea which will reach 5.5 million tonnes annually. This will strengthen the position of the company in the international market of fertilisers.” says Al-Sowaidi.
Qafco signed a letter of intent for the construction of Qafco 6 at an estimated cost of US$610 million in October 2009 with a consortium that includes Italian company Saipem and Korea’s Hyundai for the engineering, procurement and construction (EPC) of the plant.
Qafco 6 is expected to contain only urea with a production capacity of 1.3 million t/y. These massive expansion projects in the chemical fertilisers sector will make it the second most lucrative after gas in the Gulf state.
“Proof of this status is the emergence of new investment activities in progress in the fertilisers sector in Qatar with an approximate invested capital of $4 billion,” explains the Qafco general manager.
The story of Qafco’s success is linked to the abundance of the main feedstock of natural gas beneath the waters offshore Qatar. The company uses methane as feedstock, compared to the petro-chemicals industry which uses ethane.
When the natural gas is processed, it produces 90% methane and 10% ethane, which is the best feedstock for petrochemicals producers, compared to methane, the main feedstock for fertiliser producers.
The methane feedstock is used to produce ammonia which is then converted into urea, mainly of the granular variety which is easy to export.
There is strong global demand on granular urea as it contains 46% of nitrogen, which is the key element of amino acid and
protein for crops. Qafco exports ammonia and urea to more than 35 countries.
“Urea is exported to markets in Africa, Australia and North and South America,” notes Al-Sowaidi.
In addition to the urea and the ammonia, the company also produces 60 000 tonnes per year of melamine, which is the largest in the Middle East. The company signed an agreement with German company Helm to export melamine to the European market.
The company has benefited from the Chinese decision to ban fertiliser exports, as the decision helped it gain a foothold in the markets that were formerly dominated by Chinese producers.
“China has changed over the years from an exporter to an importer. This has an impact on us,” says Al-Sowaidi. “I think it is a smart decision from China to keep their fertiliser in the local market.”
Al-Sowaidi is relaxed when talking about competition with North African producers, mainly from Algeria which is revamping its fertiliser capacity through three major projects.
“There is enough room for a lot of fertiliser producers to come on stream, as there is a growth of 3.5% per year,” says Al-Sowaidi. On the contrary he is concerned about the supply.
“I am really worried about the next two to three years as there are not a lot of projects coming on stream and we need at least 6 million tonnes per year to cover the demand,” he notes.
Describing Qafco’s relationship with regional producers like SABIC, Fertil and the GPCA, Al-Sowaidi says that his company works closely with its peers.
“We coordinate in ares like safety, environment and issues related to the exports from the region, but mainly when it comes
to facing the protective measures from some countries,” Al-Sowaidi concludes.
