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Qatar Petroleum and Hydro Plan World-Class Aluminium Project
OSLO, Norway, Dec. 6 /PRNewswire-FirstCall/ -- A Heads of Agreement between
Qatar Petroleum and Hydro was signed in Doha today by HE Abdullah Bin Hamad
Al-Attiyah, Second Deputy Premier, Minister of Energy and Industry, Chairman of
the Board of Directors and Managing Director of Qatar Petroleum and Hydro's
President and CEO, Eivind Reiten.
Qatar Petroleum and Hydro are planning to develop one of the world's largest
aluminium plants in Qatar, an ideal location for serving growing markets in
Asia, Europe and also North-America. Planned capacity of a first phase is
570,000 tonnes of primary aluminium. Qatar Petroleum is a major producer of
natural gas and has contributed to developing several industrial projects in
Qatar based on its vast gas reserves. Primary aluminium production will
represent a new step in industrial diversification in Qatar. For Hydro, one of
the world's three largest integrated aluminium companies, the project will be a
major strategic investment, improving relative cost position in primary
production and further strengthening its positions in global metal markets.
The planned project involves the construction of an aluminium metal plant,
anode plant and casthouse, in addition to a dedicated power plant. Production
will be based on Hydro's reduction cell technology. The plant will be built in
the Mesaieed Industrial Area, south of Doha.
The project is planned to reach full capacity during 2009.
HE Abdullah Bin Hamad Al-Attiyah, Second Deputy Premier, Minister of Energy and
Industry, Chairman of the Board of Directors and Managing Director of Qatar
Petroleum stated: "Qatar is a strategic location for this project and has
proven natural gas reserves of more than 900 trillion cubic feet, the world's
second largest reserves, representing secure and competitive supplies for power
production. The policy of the government of Qatar is to utilize the country's
natural resources for economic and industrial development. Participation in a
project for primary aluminium production fits this policy. Qatar offers a well
developed industrial infrastructure and business climate. Excellent market
flexibility between Europe and Asia, with a potential to serve the US market,
ensuring highly competitive cost to market, makes Qatar a good strategic
location for the production of primary aluminium."
Hydro's President and CEO, Eivind Reiten, stated that Hydro's technology,
competence and market positions will help leverage the value of the project.
"A major primary aluminium production unit in Qatar will be a very important
step to strengthen our position as a top tier global aluminium company. This
project will also strengthen the good long-standing relationship between Hydro
and Qatar. Hydro has operated successfully in Qatar for 35 years in close
cooperation with Qatar Petroleum (the former Qatar General Petroleum
Corporation). We are looking forward to developing and implementing the
project, once the final negotiations and detailed engineering have been
successfully completed," said Reiten upon signing the agreement.
Solid market prospects
Markets for aluminium products and solutions are continuing its healthy growth
as the metal offers unique benefits in terms of light weight, strength,
conductivity and good energy absorption. In addition, it is easy to form and
process, impermeable and odourless and is easily recycled. This has led to an
annual global growth in the use of global primary aluminium of 3-4 percent in
recent decades. Forecasts support that this development will continue, with the
highest growth expected in China and other emerging economies.
Over the years, Hydro has developed a leading position in the aluminium market
in Europe. The company also has a strong position in the US and is about to
establish basis for further growth in Asia. The unique Hydro Metal Supplier
Concept has been instrumental for this profitable growth and allows the company
to go to market with more than 3.3 million tonnes of metal products, well
beyond the current equity primary aluminium production totalling around 1.5
million tonnes. The additional 1.8 million tonnes are mainly based on remelted
scrap and ingots, as well as metal products supplied by strategic partners.
The project
The project will consist of power generation, primary aluminium production and
anode production, as well as a casthouse producing value added aluminium metal
products.
To serve the aluminium production with required stable supplies of power,
approximately 1,000 MW for the first phase, a new dedicated power plant will be
constructed. The plant site is sufficient for more than a doubling of the
primary aluminium production capacity, up to 1.2 million tonnes per year.
The power plant, as well as the primary aluminium plant, will be owned 51
percent by Qatar Petroleum and 49 percent by Hydro.
The product casthouse will have the capacity to produce value-added products
from all of the pot room metal. As Hydro is a global leader in the production,
sales and marketing of aluminium metal products, Hydro will be responsible for
marketing all casthouse products through its global system. The casthouse will
be owned 51 percent by Hydro and 49 percent by Qatar Petroleum.
Investment
Preliminary estimate for the total project is approximately 3 billion USD.
Hydro's share of the investment is estimated to be around 1.5 billion USD. The
smelter is projected to have an investment per ton capacity in the region of
4000 USD, comparing favorably to other greenfield projects.
The low investment cost per tonne, combined with a long-term, competitive gas
contract, will ensure a robust project, exceeding Hydro's profitability
targets.
Project execution
Construction is expected to be similar to Hydro's recently completed project in
Sunndal, Norway.
Hydro has successfully completed several major investment projects in its oil
and gas activities, in aluminium and in polymers in recent years, including
major projects in Qatar.
At the same time, Hydro is preparing to phase out older Soderberg potlines at
its primary aluminium plants in Ardal and Hoyanger, Norway, latest by the end
of 2006, with approximately 70,000 tonnes annual production capacity, in order
to meet future emission standards. Hydro is also reviewing the viability of its
primary aluminium plants in Germany, where the anticipated increased costs for
electric power and the strong Euro constitute major challenges.
About the partners
Qatar Petroleum (previously known as Qatar General Petroleum Corporation) was
established in 1974 as a national corporation completely owned by the State of
Qatar. Qatar Petroleum is responsible for all oil and gas industry processes in
Qatar and abroad, including the exploration and drilling for oil, natural gas
and other hydrocarbon substances, production, refining, transport and storage
of the aforementioned substances and any of their derivatives and by-products,
as well as trading in, distribution, sale and export of these substances.
Hydro is a Fortune 500 energy and aluminium supplier operating in more than 40
countries. The company is a leading offshore producer of oil and gas, the
world's third-largest aluminium supplier and a leader in the development of
renewable energy sources. Hydro's 36,000 employees create value by
strengthening the viability of the customers and communities we serve.
Certain statements in this press release are or may constitute "forward-
looking" statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Statements that are not in the nature of historical facts
may be deemed to be forward-looking statements and may contain identifying
words such as "believes", "anticipates", "plans", "expects" and similar
expressions. These forward looking statements are based on Hydro's current
expectations, assumptions, estimates and projections about the company and the
industries in which it engages in business. All forward-looking statements
involve risks and uncertainties. For a detailed description of factors that
could cause Hydro's actual results to differ materially from those expressed in
or implied by such statements, please refer to its annual report on Form 20-F
for the year-ended December 31, 2003 and subsequent filings on Form 6-K with
the U.S. Securities and Exchange Commission. With respect to each non- GAAP
financial measure Hydro uses in connection with its financial reporting and
other public communications, Hydro provides a presentation of what Hydro
believes to be the most directly comparable GAAP financial measure and a
reconciliation between the non-GAAP and GAAP measures. This information can be
found in Hydro's earnings press releases, quarterly reports and other written
communications, all of which have been posted to Hydro's website
(http://www.hydro.com/).
Contact
Idar Eikrem
Telephone (+47) 22 53 32 73
Cellular (+47) 95 02 83 63
E-mail
Thomas Knutzen
Telephone +47 22539115
Cellular +47 90612359
E-mail
Hydro Aluminium
Drammensveien 264
N-0240 Oslo
Norway
Telephone: (+47) 22 53 81 00
Fax: (+47) 22 53 27 25
http://www.hydro.com/
The press release can be downloaded from the following link:
http://hugin.info/106/R/971330/142282.pdf
DATASOURCE: Norsk Hydro
CONTACT: Idar Eikrem, +47-22-53-32-73, cell, +47-95-02-83-63, or
; or Thomas Knutzen, +47-22539115, cell, +47-90612359, or
Web site: http://hugin.info/106/R/971330/142282.pdf
http://www.hydro.com/