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$6bn new Qatar petrochems plant targets China

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For proponents of the New Silk Road and the eastwards shift in the global economy news that Exxon and Qatar Petroleum have just signed a deal to build a $6 billion petrochemicals complex for exports to the Asia Pacific region is a further confirmation of their thesis.

At a press conference in Doha yesterday the two energy companies announced that the giant complex will be online in 2015. Exxon is taking a 49 per cent stake in the project which comprises at 1.6 million-tonne-a-year cracker, two 650,000-tonne polyethylene plants and a 700,000 ethylene glycol plant.

Biggest energy deal

This is the biggest energy project investment in the Gulf region in three years. Exxon president Stephen Pryor told Bloomberg: ‘The biggest growth markets for petrochemicals in the world are in Asia Pacific with China being the biggest piece of that’.

He said Exxon intends to raise chemical production capacity in the Middle East by as much as 50 per cent over the next six years. Exxon is also making huge investments in Saudi Arabia.

There is a certain irony in the quintessential US energy giant Exxon profiting from the shift in the global economy towards the Asia Pacific. It just shows that business is business wherever it is done, provided that profits flow back to shareholders.

For the US remains a leader in many aspects of energy technology, and it is generally for technological expertise that oil majors are welcome these days, not for their money. Could a Chinese energy company build, operate and finance such a sophisticated plant at such keen margins?

US technology

Clearly the US has not entirely lost its commercial advantage, even in the expansion of the Asia Pacific region. It is a reminder that the growth and development of poorer countries does not necessarily come at a loss to richer nations.

Indeed, over the past 25 years richer nations have made considerable advances in per capita wealth, ahead of the Third World whose constantly rising population dampens any per capita advance. Will the poor always get poorer and the rich richer?

Not necessarily, China is the exception that might provide a new rule. But many other developing nations lag far behind.

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Written by Peter Cooper

January 7, 2010 at 10:56 am

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