Following an upgrade to its existing ethylene plant and another major expansion underway at its low density polyethylene facilities, Qatar Petrochemical Company (Qapco) is poised to raise revenues to unprecedented levels after a significant year in which profits and revenues reached new highs.

Qapco has just completed at an investment of $230 million the second phase of its ethylene plant (EP-2) to raise capacity from 525,000 tonnes per year (tpy) to 720,000 tpy. Earlier this year, it signed a technology licence agreement with Basell Polyolefin GmbH of Germany for its third LDPE plant at Mesaieed Industrial City (MIC). It will have a capacity of 250,000 tpy, expandable to 300,000 tpy. Basell is a global leader in the development and licensing of polypropylene and polyethylene processes and is currently one of the largest producers of polypropylene and polyolefin products with manufacturing facilities around the world.
The company is also involved in Qatofin’s 450,000 tpy linear low density polyethylene (LLDPE) project which is to be completed in the fourth quarter of 2008 at a site adjacent to the Qapco plant at MIC. The main EPC contractors for the LLDPE facilities are Snamprogetti of Italy and Archirodon of Greece. A contract to build, own and operate a logistics terminal in Mesaieed was awarded to VOS Logistics of the Netherlands.
Qapco is a joint venture between Industries Qatar (80 per cent) and Total Petrochemicals (20 per cent), while Qatofin is a venture between Qapco (63 per cent), Total Petrochemicals (36 per cent) and Qatar Petroleum (1 per cent).  Qatofin will utilise ethane feedstock that will be made available from further development of Qatar’s gas resources.
Qatofin will partner with Q-Chem II in constructing one of the largest ethane crackers in the world at Ras Laffan Industrial City (RLIC) with an ethylene capacity of 1.3 million tpy which may be increased to 1.6 million tpy. The cracker will be owned by Ras Laffans Olefins Company, a joint venture between Qatofin (45.7 per cent), Q Chem II (53.3 per cent) and QP (1 per cent). The ethylene will be shipped by a pipeline from RLIC to MIC.
The RLIC ethane cracker will utilise gas produced by Total from the North Field. The EPC contract for the Ras Laffan ethane cracker was awarded to Technip of France.
Mohammed Al Mulla, general manager of Qapco, said the investment in LDPE-3 was decided by Qapco on the basis of excess ethylene available from the Qapco ethylene expansion project and also on the basis of additional ethylene likely to be available from Qatofin’s share of ethylene in the Ras Laffan cracker after feeding the requirement of its LLDPE plant of 450,000 tonnes capacity. The LDPE production coming from the new plant would primarily be sold in Asia and Europe. The total project cost of the LLDPE unit along with the Qatofin share in the Ras Laffan cracker is around $1.24 billion.
LDPE -3 is forecasted to be completed at the end of 2010 with commercial production expected in early 2011. After the startup of LDPE-3, the total polyethylene capacity of Qapco including Qatofin would increase to approximately 1.2 million tpy comprising 650,000 to 700,000 tpy of LDPE and 450,000 tpy of LLDPE.
Qapco has made investments in the Qatar Vinyl Chloride and Qatar Plastic Products Company projects, both of which it said were operating efficiently and showing consistently satisfactory results. During 2006, operating margins of QVC had been under tremendous pressure because of the high cost of ethylene, both locally sourced and imported. However, this problem will be mitigated to some extent once QVC starts receiving additional ethylene from the EP-2 project
The consumption of polyethylene has increased dramatically in the last few decades because of its usefulness in packaging food, detergents, oil and other products as well as for making pipes and fitting in the construction industry and components for the automobiles sector.
Al Mulla said the large-scale production of LDPE would bring economy to the overall operations besides increasing Qapco’s overall revenues and profits which have already touched record levels.
In 2006, Qapco’s total sales were QR 2.17 billion ($596 million), some 6 per cent over the previous year, while the net profit was QR1.03 billion, up 16 per cent. LDPE accounted for QR1.76 billion in sales, with the contribution of ethylene and sulphur being QR407 million and QR9 million respectively.
Among recent marketing contracts Qapco signed was one with Finolex Industries of India for the annual sale of 22,500 tonnes of ethylene and between 40,000 and 60,000 tonnes of Qatar Vinyl Company’s ethylene dichloride (EDC) and vinyl chloride monomer (VCM).
Supplies will begin from New Year’s Day 2008 and the contract is valid until December 31, 2009.
Finolex Industries’ assistant managing director and chief operating officer Saurabh Dhanorkar said his company had first signed an ethylene supply contract with Qapco in 1994. He added that Finolex would use Qapco’s and QVC’s raw materials for its PVC plant in India.
The Finolex Group is one of India’s leading industrial companies engaged in diverse areas such as chemical, petrochemicals, electrical products and telecommunications.
Qapco has a major presence in India with three liaison offices in the country. The main liaison office is in Mumbai, while the other two are in Delhi and Chennai.
Since its inception, Qapco has established solid and strong business relationships with India in particular, and Asia in general. Now Qapco exports more than 200,000 tonnes of its Lotrene brand of LDPE to all the Asian countries in the Far East, Southeast Asia and the Indian Subcontinent. With the completion of the ethylene expansion project, it will once again be an important supplier of ethylene as a feedstock to the Asian petrochemical industry. Qapco said Asia had been very attractive to all the major plastic producers.
 “The company enjoys a long presence in the region which has helped us build a strong and loyal customer base and also helped us in establishing ‘Lotrene’ as a premier and well-known brand of LDPE,” it said.