Exxon Says Still Working On Qatar Ras Laffan Project

11.08.2010 -

Oil major Exxon Mobil is still working with Qatar Petroleum (QP) on a planned $6 billion petrochemicals complex, a spokesman for the U.S. firm said on Tuesday, refuting a media report that it had quit the project.

"We signed a heads of agreement (document) with Qatar Petroleum in January 2010 to progress the joint development of a world-scale petrochemical complex and we continue to work with Qatar Petroleum on the project," the spokesman said in an emailed statement to Reuters.

A heads of agreement is a non-binding document outlining the main issues relevant to a tentative partnership agreement.

Middle East Economic Digest (MEED) magazine, citing unnamed sources close to the partners, said the pair ended plans for the new project after talks in June and July. Qatar Petroleum will now seek a new partner, MEED said.

Qatar Petroleum declined to comment.

"Specific details regarding the proposed project schedule, next steps and timing are considered confidential," the spokesman said.

Start-up of the plant, which has been delayed by three years, is slated to begin in 2015. Exxon and QP have been talking about the plant since signing an initial deal in 2005. A final deal was expected in 2006.

The complex is located in the industrial city of Ras Laffan and is estimated to cost $6 billion.

The complex includes a 1.6 million tons per year (tpy) steam cracker and associated units including two 650 tpy polyethylene plants and a 700 tpy ethylene glycol facility. Steam crackers are units of petrochemical plants that turn naphtha and light hydrocarbons into ethylene, propylene, and other building blocks for plastics and chemicals.

Qatar is the world's largest producer of liquefied natural gas (LNG) and Exxon is the second largest foreign investor in the Gulf Arab state after Royal Dutch Shell. Exxon, heavily involved in large liquefied natural gas projects in Qatar, is a 10% shareholder in the Ras Laffan refinery which is operated by Qatar Petroleum.

It would have been the third time U.S. companies have pulled out of energy projects in the region. In April, U.S. oil firm ConocoPhillips abandoned a refinery project in Saudi Arabia and a $10 billion Shah sour gas development in the United Arab Emirates.