Qatar Fertiliser Company (Qafco) will become the world's biggest single-site producer of urea and ammonia fertilisers after it completes its latest expansion project, the company said.

Work will begin soon on the fourth-stage expansion for which Qafco has awarded a $535 million contract to German multinational engineering company Krupp Uhde GmbH. Krupp will build an ammonia unit with a daily capacity of 3,500 tonnes and another unit to produce 2,000 tonnes of urea per day, along with other support facilities.

Upon completion, the plant is set to bring Qafco's annual production capacity to 2 million tonnes of ammonia and 2.8 million tonnes of urea, thereby boosting ammonia production by 50 per cent and urea production by 65 per cent.

Qafco recently signed an agreement with a consortium of banks for a loan of $400 million to finance the project. The remainder will come from existing reserves and cash flow from operations.

The expansion plan includes the building of a formaldehyde plant with an estimated daily production capacity of 65 tonnes. A joint venture company that will own the formaldehyde plant is being set up.

Qafco will hold a 70 per cent stake in the formaldehyde company. Qatar Manufacturing Industries Company, United Investment Company and Qatar Ladies Investment Company will hold the remaining 30 per cent.

A Qafco official said the tender was granted to Krupp as it met all the technical requirements of the project.

"Krupp outbid the competitors, Snamprogetti of Italy and Kellogg Brown and Root of the US," the Qafco official said.

"Krupp Uhde GmbH is a well-known world class engineering company, with an outstanding track record in the fertiliser and petrochemicals industries."

Construction is scheduled to start in October with handover targeted for May 2004.

The company said Qafco-4 was designed to be a state of the art plant. The design and engineering of the project facilities would be according to environmental considerations, ensuring compliance with the highest standards of safety.

The three completely integrated Qafco trains now in operation jointly produce 1.3 million tonnes of ammonia and 1.6 million tonnes of urea.

On completion of the fourth expansion project, Qafco expects to cut down unit production cost, thereby boosting profitability.

"This will put Qafco on a stronger footing as a key player in the global fertiliser market," the spokesman said.

The project will help create job opportunities for nationals and ensure optimal utilisation of the nation's gas reserves. It will also bolster the nation's economy and give further impetus to the development process, Hamed A al-Marwani, Qafco industrial relations manager said.

Qafco was established in 1969 as a joint venture between the Government of Qatar and a number of multinational firms to utilise Qatar's abundant gas resources for producing ammonia and urea fertiliser.

The only fertiliser producer in Qatar, it is jointly owned by Qatar Petroleum (QP) as 75 per cent shareholder and Norsk Hydro of Norway (25 per cent).

The company is instrumental in the industrial diversification programme of the Qatari Government through the optimal utilisation of national resources. Its establishment formed the basis of the Mesaieed Industrial area and over the past 25 years it has progressively developed its productive units, production capacities and product quality.

This steady growth and success made Qafco the largest single fertiliser producer in the Middle East and put Qatar among the leading exporters of ammonia and urea in the world.

Qafco inaugurated its first plant in 1973 with a design capacity of 900 tonnes of ammonia and 1,000 tonnes of urea daily. Through the years, the company's plants have been extensively developed and they are regularly modified and modernised to be compatible with the latest technology in order to ensure continuous supply of high quality products.

The second integrated train was inaugurated in 1979 and the third in 1997. Each train comprises two units, one for production of mmmonia and the other for urea. "Capitalising on its conspicuous success and accumulated experience during the last two decades, Qafco is confident about its potential for further growth," the company said.

The extensive analysis of the global nitrogen fertiliser demand and market trends carried out by the specialised consultant firm Chem System indicates that Qafco's position as a world-class producer of fertilisers will remain promising, and that Qafco's product focus should continue to be with fertilisers," the company said.

"The company holds a significant share in the international fertiliser market. This is mainly attributed to the high quality products, strategic geographical location and efficient logistic facilities on-site that enable Qafco to fulfil its many commitments on schedule," it said.

To ensure smooth loading and shipping of its products to world-wide destinations, the company has established two jetties and three berths equipped with five ship loaders to load three ships simultaneously with ammonia and urea for export.

Capitalising on these advantages, Qafco has expanded its markets and progressively increased its exports and net profits.

While its main markets are in South and East Asia, Qafco exports to 35 countries. The main importers of ammonia are India, Australia, Thailand and the US.

The main importers of urea are China, India, the US, Australia, Vietnam, Pakistan, Japan and Argentina.

Qafco's financial statements are prepared in accordance with statements of international accounting standards issued by the international accounting standards committee.

The company uses the IBM AS/400 for database management and has 3 main systems to support its IT requirements. They are finance management - JD Edwards, maintenance management - Idhammar and personnel and payroll, developed in-house. The company uses applications developed in-house for supporting IT requirements and has a centralised CAD network catering to the engineering requirements of the maintenance and production departments.

The Qafco complex facilities include a power station, a sea water intake system for process cooling and desalination, desalination plans, nitrogen units, ammonia storage comprising three fully refrigerated tanks with a total capacity of 67,000 tonnes, three urea bulk halls with a total capacity of 230,000 tonnes and four urea bagging lines.

The export terminal comprises two jetties and three berths with a total of five ship loaders for the export of bulk urea, bagged urea and ammonia.