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DOHA, Jan 14 (Reuters) - Qatar Petroleum and Shell said they had decided not to proceed with their $6.4 billion AlKaraana petrochemical project in the Gulf state, the region'ssecond big energy project to be shelved since oil prices beganto plunge late last year.
Prices quoted by contractors to build the huge complexshowed the project was "commercially unfeasible, particularly inthe current economic climate prevailing in theenergy industry", the two companies said in a joint statementon Wednesday.
State-owned Qatar Petroleum and Shell had agreed on theproject in December 2011; they were to build a petrochemicalcomplex in the Ras Laffan Industrial City, with the Qataricompany owning 80 percent and Shell 20 percent.
The Al Karaana project had appeared to face delays evenbefore oil prices started to tumble. Requests for banks to helpfinance it were due to be sent out by the end of the firstquarter last year, but this did not happen.
That suggests the oil price tumble may be promptingcompanies formally to shelve projects that were in any caselooking uncertain because of changes in the industry andshifting demand projections.
Early this month, industry sources told Reuters that SaudiArabia's state oil giant Saudi Aramco had suspended plans tobuild a $2 billion clean fuels plant at its largest oil refineryin Ras Tanura.
Many other multi-billion dollar projects in the region arestill going ahead, however, including the Sadara joint venturepetrochemical complex of Aramco and Dow Chemical, whichhas an estimated value of around $20 billion.
Existing partnerships between Qatar Petroleum and Shellinclude Pearl GTL, the world's largest integrated gas-to-liquidsplant, located at Ras Laffan in the Gulf state. (Reporting by Amena Bakr; Editing by Andrew Torchia)
