Qatar, Shell in $6.4 billion petrochemical complex agreement

Qatar signed a deal with Royal Dutch Shell (RDSa.L) on Sunday to develop a $6.4 billion petrochemicals complex in the Ras Laffan industrial city in the Gulf Arab state.

Qatar’s energy minister, Mohammed al-Sada, and Shell chief executive Peter Voser signed the agreement in Doha.

“We estimate the cost to be $6.4 billion but at this stage one should be cautious,” Sada said.

Asked whether the agreement replaced a similar one signed with U.S. group Exxon Mobil (XOM.N), Sada said: “No, this is not a replacement. This is a continuation of our strategy. There will be other petrochemical plants in the pipeline.”

While industry sources said last year they believed Exxon had pulled out of the agreement, chief executive Rex Tillerson denied that and told reporters the company was waiting for Qatar to make its decision.

The plant agreed with Shell will have the capacity to produce 1.5 million tonnes of mono-ethylene glycol per year and 300,000 tonnes of linear alpha olefin, mostly for export to Asian markets, an official statement said.

State-run Qatar Petroleum will have an 80 percent equity interest in the project and Shell will hold the remaining 20 percent.

Qatar is the world’s largest exporter of liquefied natural gas (LNG), gas chilled for export by ship.