Qatar Vinyl Company (QVC), which has been supplying caustic soda to the Qatari market, has begun exporting the product to the UAE and Oman, the company announced.

"QVC's major markets are South-east Asia, Australia and the Indian subcontinent," the company said, adding that small quantities were being shipped to Europe and the US. The company works through a marketing network of shareholders in various countries.

QVC's shareholding is spread out between Qapco (31.9 per cent), Norsk Hydro (29.7 per cent), Qatar Petroleum (QP) (25.9 per cent) and Altofina (12.9 per cent). The factory investment was $700 million.

The joint venture agreement was signed in January 1997 and an Emiri decree passed in December 1997 established QVC as a Qatari share company. The EPC contract was granted to a consortium of Krupp Uhde of Germany and Technip of Italy on a turnkey lump sum basis. Three lead coordination banks - Credit Suisse First Boston, Arab Petroleum Investment Corporation and BNP Paribas - were joined by 28 other financial institutions to secure the credit facility of $475 million.

Production of ethylene dichloride (EDC) and caustic soda began in April 2001, followed shortly by vinyl chloride monomer (VCM) in June of the year. The company annually produces 220,000 tonnes of VCM, 175,000 tonnes of EDC and 580,000 tonnes of caustic soda.

The two major raw materials are salt and ethylene. Natural gas is supplied by QP and ethylene is supplied by Qapco. Salt is imported from Jordan, Australia, Namibia and India.

The QVC plant takes fuel gas from QP for its 130MW power plant. There are two caustic soda storage tanks with a capacity of 40,000 tonnes. The facilities include a bulk storage for salt (50,000 tonnes) including import conveyor system with a capacity of 1,200 tonnes per hour. Also provided are an EDC tank (15,000 tonnes) and one refrigerated VCM tank (20,000 tonnes). The company has jetty facilities to cater for ship loading facilities for caustic soda, EDC and VCM in addition to off-loading facilities to receive bulk salt shipments.

QVC's production facilities are integrated with those of Qapco. "The integration is expected to bring cost-effectiveness in both Qapco's and QVC's operations," said Qapco chairman and Minister of Energy and Industry Abdullah bin Hamad Al Attiyah in his report on Qapco's 2001 performance. "QVC's products are believed to have immense demand in the international market and the project is expected to contribute effectively to the maximisation of shareholders' wealth and the strengthening of the state economy.

"A future plan for QVC to have its on PVC plant and to expand its existing production facilities on the basis of additional ethylene from Qapco is also on the cards."

For EDC and VCM, the major customers are PVC manufacturers while the aluminium industry is the major customer for caustic soda. For marketing caustic soda, QVC also works through distributors who in turn supply to various industries.

"The markets for QVC products are mature ones. Growth comes mainly from Asian markets. As PVC is mainly used for infrastructure projects, growth largely depends on the economy of the country or region," a company statement said.

About the challenges the company faced, QVC said: "The PVC and caustic industry being cyclic in nature, the main challenge for the producer is to predict the demand and future prices for each market and understand the cycle well. The recent trend is that these cycles are shorter and more unpredictable. As PVC is infrastructure plastic, growth also depends on economic recovery and GDP growth rate."

The management feels the near-term prospects are "reasonably positive, considering the rather difficult global economic outlook."