State-owned Qatar Petroleum (QP) signed a joint venture agreement Sunday with France's Total and Japan's Idemitsu, Cosmo Oil, Marubeni and Mitsui for a new condensate refinery to be built in Qatar at Ras Laffan Industrial City.
Under the agreement, which was signed in Doha by QP chairman Mohammed al-Sada, who is also Qatar's minister of energy and industry, and senior executives of the international companies, QP will hold hold 84% of the Laffan Refinery 2 (LR2) joint venture, Total will hold 10%, Idemitsu and Cosmo 2% each, and Marubeni and Mitsui 1% each, the companies said in a joint statement.
The planned LR2 condensate refinery would be similar in configuration to the Laffan Refinery 1 (LR1), which started operations in September 2009, and would have a processing capacity of 146,000 b/d of condensate, they said.
"Like LR1, LR2 plans to produce petroleum products including naphtha, kerosene, diesel oil and LPG by refining condensate produced at Qatar's North Field, which is one of the largest natural gas fields in the world," Cosmo Oil said in a statement Monday. "To be equipped with a diesel hydrotreater, LR2 plans to increase the added value of diesel oil products."
The new refinery is to be operated by Qatargas, a group of LNG production joint ventures between QP and a number of international partners. It will have daily production capacity of 60,000 b/d of naphtha, 43,000 b/d of jet fuel, 24,000 b/d of gas oil and 9,000 b/d of liquid petroleum gas (LPG).
The total cost of the LR2 project is estimated at $1.5 billion, including $1.2 billion for the capital cost of the refinery, with completion of construction expected in the second half 2016, the partners said.
"The construction of the new refinery will give Ras Laffan a total installed condensate refining capacity of about 300,000 b/d, making it one of the largest single-site facilities of its kind in the world," Sada said.
Commissioning of a diesel hydro-treater unit, currently under construction at the site, was expected in the second quarter of 2014. The unit would have enough capacity to process all the gas oil from the LR1 and LR2 into ultra-low sulfur diesel meeting the most stringent international environmental specifications, he said.
The project would be financed through a combination of equity and bank debt, Sada added.
QP's director for downstream ventures, Mohammed al-Hajiri, said LR2 was designed to process untreated condensate from Qatar's North Field -- the giant offshore gas field that supplies gas to Qatar's LNG production facilities and a number of other industrial projects. Its configuration would include capacity for dispatching diesel by truck to the local market as well as the diesel hydro treater unit, which would produce products suitable for export to markets such as Europe with particularly stringent environmental specifications for petroleum products.
Qatargas CEO Sheikh Khalid Bin Khalifa, who is also chairman of the LR2 joint venture's executive committee, said detailed engineering work for the project began in early April.
"We expect to complete and commission the project by the fourth quarter of 2016," he said.
In a separate statement Monday, Idemitsu said: "The participation of Idemitsu in LR2 will contribute in improving the company's stable and flexible procurement of crude oil and petroleum products as well as further strengthen its strategic partnership with Qatar."
"Idemitsu expects to be able to expand its involvement in the fields of petroleum/petrochemical products business and natural gas-related businesses that are being implemented in Qatar," said the company, which has been making crude oil purchases since 1979.
Idemitsu and Cosmo Oil each own 10% stakes in the LR1 project, and Marubeni and Mitsui each own 4.5% stakes.
Qatar is the world's biggest producer of condensate, a type of ultra-light crude oil often produced from gas fields along with natural gas.
In the case of the Persian Gulf emirate, which is also the world's leading LNG exporter, the condensate is a byproduct of gas production from the North Field. The vast offshore deposit containing about 900 trillion cubic feet of proven gas reserves is Qatar's side of the world's largest non-associated conventional gas reservoir, which it shares with Iran.
Condensate tends to fetch a premium to most crudes on international markets due its high yields, when processed, of naphtha, which is widely used as a petrochemicals feedstock, and light petroleum fractions used in blending premium fuels.
