Streaming Ahead

Qatar’s Minister of Energy and Industry HE Mohammed bin Saleh al-Sada stated that in 2014, there are 670 industrial establishments in Qatar, with capital reaching a total of $68 billion, 52% of which is foreign investment. The government’s current focus is on the diversification of the economy to decrease dependence on hydrocarbon-generating activities and to boost the role of the private sector. Qatar has made significant investment in the domestic production of aluminum, concrete and steel, both for construction projects within the country as well as for export. Qatar is positioning itself for a future where trade and industry are supports, which can gradually grow the economy away from its dependence on hydrocarbon wealth.

BOOSTING INDUSTRIAL DEVELOPMENT

Industrial SMEs and their income and equipment are tax-exempt in Qatar, and investors receive free technical consulting and advice. Qatar offers a transparent legal environment, valuable in the region, and industrial SMEs in Qatar have made remarkable progress in recent times, thanks to the strength of the Qatari economy, the stability of the local currency against foreign currencies, and political stability and security.

One significant development over 2014 is the progress made in developing the New Port, just south of Doha, which is scheduled to be completed in 2016 and will service military and commercial vessels. The New Port is part of the QNV 2030, and the call to create it was given in 2007 by His Highness Sheikh Hamad Bin Khalifa Al Thani, former Emir of the State of Qatar. Adjacent to the New Port is the Qatar Economic Zone 3 (QEZ3), a self-contained development with industrial and residential facilities. The QEZ3 will be an important gateway into Qatar, and will provide an economic hub around the New Port for manufacturing, logistics and trade across a number of industrial sectors, and foster import and export synergy.

Also a key development in 2014 was the opening of the Hamad International Airport near Doha on April 30th. Capable of serving over 360,000 flights and 30 million passengers every year, the new airport will undoubtedly also help to support the development of Qatar’s industrial sector by facilitating travel and trade.

DOWNSTREAM DEVELOPMENTS

Qatar will utilize their hydrocarbon resources to develop downstream industries. The government is investing in infrastructure and expects the new port to have a major influence on operations. In December 2014, Qatar’s national petrochemical company, Qatar Chemical and Petrochemical Marketing and Distribution Company (Muntajat), established a global marketing firm, Muntajat B.V., with headquarters in The Hague, Netherlands. Muntajat now has 17 marketing offices around the world which service customers in more than 120 countries, delivering Qatar-produced chemicals, polymers, and fertilizers.

The major player in the industrial sector in Qatar is the state-run Qatar Industries (QI), which is 70% owned by QP, employs around 4,000 people, and comprises four major firms: Qatar Petrochemical Company (QAPCO), Qatar Fertilizer Company (QAFCO), Qatar Fuel Additives Company (QAFAC), and Qatar Steel. These companies deal either with natural gas or derivatives, as well as intermediate products for further downstream industrial production.

QAPCO is a joint venture of QI (80%) and Total Petrochemicals (20%), and produces a wide range of plastics and vinyl. With a production capacity of 360,000 metric tons a year, it is also the Middle East’s largest producer of low-density polyethylene (LDPE), which is exported to 85 countries around the world.

QAFCO is a joint venture between QI (75%) and Yara Netherlands (25%), which mainly produces ammonia and urea. QI has a 50% stake in QAFAC, which mainly produces ethylene and sulfur, nearly all of which is meant for export, and fully owns Qatar Steel.

Innovation in technological exploitation of downstream production from the production of natural gas includes industrial applications for methanol. Qatar Fuel Additives Company (QAFAC) are an example, increasing production while also becoming more environmentally responsible through their Carbon Dioxide Recover (CDR) project, which captures CO2 from methanol reformer flue gases, cleaning the fumes and injecting the high quality CO2 back into the methanol production. Methanol production is growing in the US, due to the growth of the shale gas industry, and Qatar is also poised to exploit the growing interest around the world for exploitation of methanol as fuel and additive, as well as producing plastics, olefin synthetic fibers as well as the use of methane for direct methanol fuel cells.

BESIDES NATURAL GAS, WHAT?

While oil and gas still account for over 50% of Qatar’s GDP and 85% of export earnings, the industrial sector is gradually picking up speed. According to the National Statistics Agency, the non-oil sector in 2011 contributed 48% to GDP, of which 17.8% stemmed from industry. Between 2007 and 2011, the annual contribution grew at an average rate of 12.0%, mainly as a result of the expansion in projects related to refining, gas-to-liquids (GTL), petrochemicals, fertilizers, and metals.

Qatar has two main manufacturing hubs: the industrial cities of Ras Laffan and Mesaieed. Located some 50 km north of Doha, the Ras Laffan Industrial City is the country’s main center for the production of liquefied natural gas and GTL. It is home to, for example, the Pearl, the world’s largest GTL plant, Oryx GTL, and the Ras Laffan condensate refinery.

Qatar Flour Mills (QFM) is in competition with bigger regional players, but have access to the Arabian Sea, from which they can export directly to Africa and other places. During the global financial crisis, the Gulf has been relatively economically stable. Because of this there has been a generation of new industries, with more people have been coming here to work and as such, the population has increased significantly.

Industrial developments under development include the Al Sejeel Petrochemical Project. A joint venture of QAPCO (80%) and QP (20%), the $5.4 billion complex will begin construction in July 2015 in Ras Laffan, and set to be completed in 2018, with a capacity of producing some 1.6 million tons of polyethylene and 1.4 million tons of ethylene annually. Both the polyethylene and ethylene are mainly meant for export.

Qatar Intermediate Industries Company Limited (Alwaseeta) also participates in realizing the QNV 2030 strategy, to develop intermediate industries and play a pivotal role in supporting the diversification of the country’s economy. As part of this, they are developing waste management facilities for the country, bringing in new technology to limit the impact of industry on the environment.

Hydrocarbons will continue to produce the lion’s share of Qatar’s national income, as well as export earnings and government revenues; nonetheless, the industrial sector has also grown in importance, and thanks to investment from Qatar’s leaders, who keep their eyes on the horizon, this will no doubt continue. This investment will help to create much needed jobs, which will in turn attract more skilled foreign laborers to support a growing economy in the Gulf.