Qatar Economic Review 2006(September) - QNB

Qatar Steel Company (QASCO)QASCO is a wholly owned subsidiary of Industries Qatar (IQ), which was initially set up in 1974 as ajoint venture. The plant was commissioned in 1978 as the first integrated steel plant in the Arabian Gulfregion. In 2005, QASCO produced 1.1 million tons of steel billets, 850,000 tons of re-inforced steel bars,and 140,000 tons of coil. QASCO recorded a Net Profit of QR 705.5 million in 2004, compared to QR326.1 million in 2003. Expansion plans at QASCO saw the signing of an agreement in February 2005between QASCO and Kobe Steel of Japan, to build a new Direct Reduction Iron plant with an annualproduction capacity of 1.5 million tons. The plant is set for completion by mid-2007.Qatar Fuel Additives Company (QAFAC)QAFAC is owned by Industries Qatar (50%), OPIC Netherlands Antilles N.V. (20%), LCY InvestmentsCorporation (15%) and International Octane Ltd. of Canada (15%). QAFAC’s plant in Mesaieed hasa production capacity of 610,000 tpa of Methyl Tertiary Butyl Ether (MTBE), and 832,500 tpa ofmethanol.The plant’s development costs were in the vicinity of $650 million, with production of methanol andMTBE starting in June and July 1999 respectively. In 2005, QAFAC produced 700,000 tons of MTBEand 900,000 tons of methanol, compared to 630,000 tons of MTBE and 840,000 tons of methanolproduced in 2004. QAFAC posted a Net Profit of QR 794 million in 2005, compared to QR 273 million in2004. In 2005, MTBE product prices averaged $560 per ton, compared to $396 per ton in 2004, whileMethanol prices averaged $211 per ton in 2005, compared to $208 per ton in 2004.In December 2004, QAFAC signed a Heads of Agreement with existing partners for establishinga new project called QAFAC II. Project costs are estimated at $800 million, with commissioningexpected in 2008.Qatar Petrochemical Company (QAPCO)Industries Qatar owns 80% of QAPCO with the remaining capital of 20% held by Total Petrochemicals(Chemical arm of France’s TotalFinaElf). QAPCO commenced full commercial operations in 1981 andproduces high quality Ethylene, Low Density Polyethylene (LDPE) and Sulphur.QAPCO is currently the largest producer of LDPE in the Middle East with a production capacity of390,000 tpa. Ethylene design production capacity stands at 535,000 tpa. In 2005, QAPCO’s Net Profitincreased by 9.5% to reach QR 1,343 million, compared to QR 1,226 million in 2004. In 2005, QAPCOproduced 550,000 tons of Ethylene, 420,000 tons of LDPE and 45,000 tons of Sulphur (Table 3.12).Table 3.12QAPCO’s Production (tons)Product 2001 2002 2003 2004 2005Ethylene 535,000 495,066 525,000 500,000 550,000LDPE 382,000 379,173 385,000 370,000 420,000Sulphur 41,000 43,998 47,000 44,000 45,000Source: QAPCO.In December 2004, QAPCO started construction work for the debottlenecking of the existing ethanecracker plant, so as to further increase the capacity from the current 535,000 tpa to 720,000 tpa, bymid-2007. Concurrently, LDPE production is expected to rise to 420,000 tpa. QAPCO is also looking atthe possibility of adding another LDPE line to increase LDPE production by 200,000 tpa.KEY ECONOMIC SECTORS 26