Identifier
Created
Classification
Origin
08DOHA385
2008-05-15 13:43:00
UNCLASSIFIED
Embassy Doha
Cable title:  

QATAR BOOSTS DIVERSIFICATION AND ESTABLISHES USD

Tags:  EAGR ENRG ECON QA 
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VZCZCXRO5209
PP RUEHDE RUEHDIR
DE RUEHDO #0385 1361343
ZNR UUUUU ZZH
P 151343Z MAY 08
FM AMEMBASSY DOHA
TO RUEHC/SECSTATE WASHDC PRIORITY 7924
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
UNCLAS DOHA 000385 

SIPDIS

E.O. 12958: N/A
TAGS: EAGR ENRG ECON QA
SUBJECT: QATAR BOOSTS DIVERSIFICATION AND ESTABLISHES USD
3.2 BILLION FERTILIZER PLANTS


UNCLAS DOHA 000385

SIPDIS

E.O. 12958: N/A
TAGS: EAGR ENRG ECON QA
SUBJECT: QATAR BOOSTS DIVERSIFICATION AND ESTABLISHES USD
3.2 BILLION FERTILIZER PLANTS



1. Boosting diversification in its hydrocarbon
extraction-dependent economy, Qatar last month began
construction on three fertilizer plants valued at USD 3.2
billion. Upon completion of the projects in Mesaieed
Industrial City (approximately 40 kilometers south of Doha),
Qatar Fertilizer Company (QAFCO) will become the world's
largest single-site producer of urea and ammonia. Bank loans
totaling approximately USD 1.6 billion will finance the
construction costs of the two ammonia plants (daily
production capacity of 2,300 tons each) and one urea plant
(daily production capacity of 3,850 tons). QAFCO will fund
the remaining construction costs by tapping its reserves as
well as cash flows generated from other operations. The three
plants are scheduled to begin production in 2010.


2. Upon completion, the new "QAFCO extension" (named QAFCO 5)
will boost the company's annual production capacity of
ammonia by 73% to around 3.8 million tons and of urea by 43%
to 4.3 million tons. The expected profits from the new
operations are considerable, since the launching of this
project coincides with a favorable international climate for
fertilizer production. Global fertilizer prices rose steadily
from 2004 to 2006 and soared in 2007 and 2008, reaching more
than USD 600 per ton. Local industry sources tell us
fertilizer prices are expected to remain at record levels
thanks to a number of factors. These include farmers' higher
demand for the product, increased demand for food crops in
the production of ethanol and other biofuels, higher energy
prices, and China's decision last month to double taxes on
fertilizer exports to bolster domestic supplies for its
farmers.

RATNEY