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Commissioning of power plant further delays Qatalum ramp-up

Qatalum, the 50/50 joint venture aluminium plant between Qatar Petroleum and Hydro, is experiencing further delays in reaching full production due to challenges with the commissioning of the power plant’s steam turbines. Qatalum, currently producing at 70 percent capacity, is now expected to reach full production by the end of third quarter 2011.

Further ramp-up is dependent on a successful commissioning and performance testing of the two steam turbines which in the revised commissioning plan will enable Qatalum to reach full output by the end of the third quarter 2011.

According to the current ramp-up plan, Qatalum should have run at full 585,000 tonnes per year capacity from June 2011. Currently, 490 pots of a total of 704 are in operation, representing about 70 percent of total capacity. The producing pots are operating well and according to specifications.

The power plant is being built for Qatalum by a consortium between General Electric (GE) and Doosan under a turn-key contract and is now significantly delayed compared to the original project plan.

During commissioning of the power plant’s steam turbines throughout May and into June, several technical issues were identified. These have delayed the takeover process. GE/Doosan is in the process of solving these issues, and Qatalum expects to take over the first of the two steam turbines for permanent operation shortly. Qatalum has so far only taken over four gas turbines with related support systems for permanent operation.

Following the takeover of the first steam turbine, ramp-up will continue until a new plateau is reached. At this point, the last steam turbine will be phased in, before continuing ramp-up towards the full 704 pots. The speed of the remaining ramp-up will also have to be aligned with the hot summer period in Qatar.

Hydro will revert with an update on the status of the power plant and production ramp-up at its second quarter 2011 earnings release on July 26.

Certain statements included within this announcement contain forward-looking information, including, without limitation, those relating to (a) forecasts, projections and estimates, (b) statements of management's plans, objectives and strategies for Hydro, such as planned expansions, investments or other projects, (c) targeted production volumes and costs, capacities or rates, start-up costs, cost reductions and profit objectives, (d) various expectations about future developments in Hydro's markets, particularly prices, supply and demand and competition, (e) results of operations, (f) margins, (g) growth rates, (h) risk management, as well as (i) statements preceded by "expected", "scheduled", "targeted", "planned", "proposed", "intended" or similar statements.
Although we believe that the expectations reflected in such forward-looking statements are reasonable, these forward-looking statements are based on a number of assumptions and forecasts that, by their nature, involve risk and uncertainty.  Various factors could cause our actual results to differ materially from those projected in a forward-looking statement or affect the extent to which a particular projection is realized.  Factors that could cause these differences include, but are not limited to: our continued ability to reposition and restructure our upstream and downstream aluminium business; changes in availability and cost of energy and raw materials; global supply and demand for aluminium and aluminium products; world economic growth, including rates of inflation and industrial production; changes in the relative value of currencies and the value of commodity contracts; trends in Hydro's key markets and competition; and legislative, regulatory and political factors.
No assurance can be given that such expectations will prove to have been correct.  Hydro disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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