The fertiliser plant Qafco

The fertiliser plant Qafco

Non-hydrocarbons sector growing

Projects downstream to the oil and gas sector have progressed and much investment is expected in the infrastructure and construction fields

01 August 2013

Qatar’s oil and gas sector continues to be strong but its non-hydrocarbons sector is making strides raising hopes that the county will steer itself towards a broader economy that will have fewer uncertainties of the kind that now accompanies oil prices.

According to the International Monetary Fund, Qatar’s non-oil GDP growth will be 9 per cent this year and 9.5 per cent in the next. On the other hand the oil sector will grow by just 0.4 per cent and could shrink by 1.1 per cent in 2014 following a halt in the LNG expansion programme, a Meed Middle East Economic Review forecast says.

Standard & Poor’s ratings services unsurprisingly counted Qatar’s oil- and gas-based economy as the country’s strength along with its banks stability.  Better performance by the non-hydrocarbons sector should surprise no one, as this has been in the making for several years. The petrochemical industry was established several decades ago to bring value to basic oil and gas while metals too have had a long history within the Gulf context. With growing prosperity brought on by oil wealth, the construction sector and associated industries and services have surged over the years but, as they say, the best is still to come – very certainly, when you consider the upcoming soccer World Cup in 2022 and all of the business activities in its wake. With projects worth $183 billion in the pipeline including the Doha Metro Scheme, the capital’s airport and football stadiums, local businessmen will have a share in the fortunes to be made. Doha has made it clear it wants businessmen among its citizens to be part of the projects. Qatar Rail, for example, has specified that railway consortiums should partner with a Qatari firm, a move hailed immediately by the local community. The chairman of Qatar’s Chamber of commerce, Sheikh Khalifa bin Jassim bin Mohamed Al Thani, said: “The decision of Qatar Rail to integrate Qatari companies in the Doha Metro and other rail projects won by foreign companies represents a real support to the country’s economy, strengthens the private sector role and enables it to benefit as much as possible.

A facility within Logistics Village Qatar

“This integration didn’t happen before with any local company in any railway project. Thus, we look forward to seeing the Qatari companies benefiting from the proceeds of the projects carried out in Qatar, which we consider a national right. We wish that all companies will follow Qatar Rail’s strategy in this regard.”

While the construction sector hogs much of the limelight and the real estate situation is watched closely, there are other players in the challenging task of drawing Qatar away from hard core oil and gas industries. Qatar Petroleum and Shell Global Solutions are looking into starting a project to build a grassroots petrochemical complex located in Ras Laffan Industrial City. Qapco, with Qatar Petroleum, is pursuing a mega petrochemical project, namely Al Sejeel Petrochemical Complex, which will feature a world-scale mixed-feed steam cracker with plants designed to produce 2.2 million tonnes annually of a range of polymers. The project, as Qapco CEO Dr Mohammed Al Yousef Al Mulla commented, will provide more than 1,500 career opportunities for Qataris, a significant prospect when one considers the still-tiny Qatari population is rising at no small pace. Also significantly, as the official noted, it will generate “new channels for the expansion of partnerships with local suppliers and contractors while enhancing community development.”

For a state of less than modest size, Qatar has some world-scale plants. As well as Qapco, the fertiliser complex Qafco, Qatar Steel and Qatar Aluminium are ramping up output capacities or are due to do so in the near future. Qapco completed a large low density polyethylene plant in 2012 and is involved with Al Sejel; Qafco added ammonia and urea units, placing it alongside the world’s biggest plants of its kind, and Qatar Steel is completing an expansion to raise output capacity by 50 per cent from 2 million tonnes to 3 million tonnes annually with help from German specialist Siemens.  Qatalum’s smelter of capacity 585,000 tonnes annually will see an expansion before long. “Aluminium has a reasonable role in supporting and developing the industrial sector and forms a basis for midstream and downstream industries locally and globally,” said its chairman Abdulrahman Ahmed Al Shaibi.

An outcome of Qatar’s mega projects is a burgeoning local industry for providing technical support services. Recently, local firms Manweir and ABB Oryx Motors & Generators LLC (ABB Oryx M&G) were signed up by Qatar Shell in separate deals to maintain electrical motors at the Shell-operated Pearl Gas to Liquids (GTL) plant, the world’s largest  facility of its kind.  

“Our experience has taught us that supporting local manufacturers and small and medium enterprises (SMEs) is core to achieving a sustainable economy in line with the Qatar National Vision 2030. We have been very impressed with the quality of our local providers and we continue to look at opportunities to broaden that partnership base,” said Wael Sawan, managing director and chairman of Qatar Shell Companies.

Another consequence of industrial development is the need for expert logistics services. A company very active in the field is Gulf Warehousing Company, which has completed three phases of its million sq m flagship Logistics Village Qatar with the village enjoying high occupancy. With infrastructure and construction projects poised to take off in right earnest in the next few years mostly in connection with the World Cup, logistics will become an increasingly vital sector. Most of GWC’s business comes from contract logistics but it is likely it will be looking more closely at project logistics in the next few years. 

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