Interview: Abdulrahman Ahmad Al Shaibi
How much of the steel for construction related to the 2022 FIFA World Cup will be sourced domestically? Will these projects require new product lines?
ABDULRAHMAN AHMAD AL SHAIBI: As per the latest reports from the Ministry of Development Planning and Statistics and Qatar National Bank, major infrastructure projects for the 2022 FIFA World Cup are expected to gather momentum during the 2013-18 period, and are valued at $205bn. With regard to steel requirements, demand for reinforcing bars, or rebar, is expected to pick up and average out annually to a range within our production capacity of 1.6m tonnes per annum, both during this build-up period and beyond. Should consumption exceed our capacity at any stage of the period to 2022, Qatar Steel is well equipped to source the additional demand, as it has in the past, when it organised large quantities from other suppliers to meet the market requirements in Qatar and the GCC.
In regards to the need for new steel product lines exclusively in Qatar, preliminary investigations have so far reported no significant volume requirements for other types of steel. If this changes, Qatar Steel is constantly in touch with all government and technical sources to enhance its market intelligence and gear up for any changes in local steel market requirements.
As the government shifts its focus towards downstream industries, how are IQ’s petrochemical companies expanding to increase local production?
AL SHAIBI: Over the last decade, the group’s petrochemical segment witnessed significant organic growth. This has resulted in increased production of existing products like ethylene and low-density polyethylene, and the introduction of a number of new products like linear low-density polyethylene. All of these expansions were made possible by the government’s support in providing competitively-priced feedstock through Qatar Petroleum (QP).
Despite the conclusion of our major CAPEX projects in 2012, the government continues to support IQ through QP. This is evident in the recent announcement of the Al Sejeel Petrochemical Complex project, where QP has awarded Qatar Petrochemical Company (QAPCO), one of the companies we partly own, a 20% stake (IQ’s share is 16%). QAPCO will operate and manage this project on behalf of QP.
In addition to this, the group’s other joint venture in petrochemicals, Qatar Fuel Additives Company, is investing in a new CO recovery plant that will boost the group’s methanol production capacity.
These are the only projects that have been confirmed in the current 2013-17 business plan. However, it is also worth noting that we will continuously focus on investment opportunities that accrue the most profit while enhancing value as much as possible by replicating our highly successful operating model outside Qatar. The group will also look to improve the efficiency of its existing operating assets in Qatar, and seek to move into adjacent products.
How strong is the argument that supply of fertiliser will outpace demand in the next two or three years? How could this impact local production?
AL SHAIBI: The fertiliser sector has recently come under severe pricing pressure from a number of various demand and supply factors, such as higher urea imports from China, a change in natural gas pricing policy between Russia and Ukraine, and weak corn price futures in North America.
Some of these factors, along with the important structural changes going on in the natural gas industry in the US right now on account of its ongoing shale gas revolution, are likely to have a significant impact on short- to medium-term urea prices.
In the longer term, however, we remain confident that as the world population continues to increase; moreover, as more intensive farming techniques are utilised; and lastly, as levels of affluence rise around the world, the underlying demand for fertilisers will remain strong, and prices will adequately reflect this.
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