Shell and Qatar Petroleum have ended their $6.4bn proposed plan to develop Al Karaana petrochemical project in Qatar, amid plunging oil prices.

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Reuters cited the two companies as stating that the prices quoted by contractors to construct the complex indicated that the project was not commercially viable, especially given the current volatile climate in the energy sector.

The Al Karaana project is an 80:20 joint venture of Qatar Petroleum and Shell.

In December 2011, Qatar Petroleum and Shell signed an agreement to build the petrochemical complex in the Ras Laffan Industrial City.

The complex was planned to process 1.1 million tons per year (mtpa) of ethylene, 170,000mtpa of propylene, 1.5mtpa of MEG, 300,000mtpa of LAO and 250,000mtpa of OXO.

The required feedstock for the plants was planned to be acquired from the neighboring natural gas projects in the country.

Planned to be commissioned in 2018, the petrochemical complex produced products would have been primarily targeted for the Asian markets.

Qatar, an OPEC member, is planning to develop factories that make petrochemicals, aluminum and steel in order to diversify its economy away from oil and gas exports, reports Bloomberg.

Image: Qatar plans to develop factories that make petrochemicals in order to diversify its economy away from oil and gas exports. Photo: meepoohfoto/Freedigitalphotos.net.