Qatar Fertiliser Company (Qafco), which saw profits dipping in 2002, is looking for an upswing in demand with work proceeding on its fourth fertiliser plant.

The company reported it posted a net profit of QR239 million ($65 million), down from QR290.87 million in the previous year, despite ammonia and urea production reaching record levels of more than 1.41 and 1.73 million tonnes respectively. That compares with urea production of 1.67 million tonnes and ammonia production of 1.4 million tonnes during 2001.

Qafco's ammonia exports in 2002 reached nearly 406,000 tonnes. Ammonia prices tumbled to an average of $110 per tonne last year, down from $135 in 2001. The company is a joint venture with Norway's Norsk Hydro

Qafco managing director Abdullah Al Suwaidi said production was higher in the US and new production capacities had emerged in Malaysia, Indonesia and Trinidad, leading to a decline in prices.

The official said the Qafco-4 expansion would be completed in September this year.

Ammonia production was 4.2 per cent more than the targeted level, showing a marginal rise over the 2001 figure. Urea production exceeded the target by 4.6 per cent, registering a 4.7 per cent increase over the previous year, Al Suwaidi said.

Ammonia I production reached nearly 389,000 tonnes, setting a record in a shutdown year. New monthly production records of 34,804 tonnes and 34,887 tonnes for June and September, respectively, were also set last year.

Urea 2 and urea 3 productions also registered the highest-ever annual levels last year, reaching 494,000 tonnes and 813,000 tonnes, respectively. A new daily production record of 2,411 tonnes of urea 3 was achieved on November 13, 2002.

Qafco has set up a joint venture firm with three local firms to operate a urea formaldehyde plant at Mesaieed.

The new firm - Gulf Formaldehyde (GF) - has a capital of $40 million, split into 4 million shares with a face value of QR10 each. Qafco has a stake of 70 per cent, while the Qatar Industrial Manufacturing Company has 15 per cent, United Development Company 10 per cent and Qatar Ladies Investment Company five per cent.

The unit has a capacity of 82 tonnes a day and will go on stream in September.

The plant, attached to Qafco's ammonia/urea plant 3, is being built along with plant 4, slated to go onstream in mid-2004.

It will be integrated with facilities of Qafco. Germany's Krupp Uhde, which is developing Qafco-4, began work on the urea formaldehyde plant in September 2001.

Krupp Uhde was also responsible for the Qafco-3 expansion in 1997.

Qafco chairman Abdulla Hussain Salatt said the unit would make Qafco self-sufficient in urea formaldehyde, which is now imported mainly from Saudi Arabia.

For feedstock, methanol will be come from Qatar Fuel Additives Company, and Qafco will supply the urea solution.

The new company will be run by Qafco.

Qafco's fourth fertiliser plant - Qafco 4 - will make the company the world's largest single site producer of urea and ammonia.

The $535 million expansion comprises an ammonia plant and a urea plant with daily capacities of 2,000 tonnes and 3,200 tonnes of ammonia and urea respectively. When completed, the project will raise Qafco's annual capacity to 2 million tonnes of ammonia and 2.8 million tonnes of urea.

The natural gas feedstock for Qafco-4 will come from Qafco's parent company, Qatar Petroleum.