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Middle East petchem industry faces North American competition By Ashok Dutta The wider implications of North America’s shale gas boom are considerable. From a global petrochemical perspective, the continent’s producers are setting themselves up to compete with their Middle Eastern counterparts for a larger share of the Asian market. The majority of petrochemical products from the Middle East and North Africa are sold in Asia under various term-supply contracts. “We have been selling into that market [Asia] for over 30 years, with China and India being our two largest customers for PE [poly-ethylene], PP [poly-propylene] and fertilisers,” a former technical advisor to Qatar’s oil minister, Abdullah Hussain Sallatt, told Downstream MEA in a telephone interview from Doha. “With more investments planned in Saudi Arabia, the UAE and Qatar, we will spare no efforts to enter deeper and find a permanent footing for our products in Asia.” Competition is at hand, however, from producers in North America. “China is our target market and we need to be there sooner [rather] than later,” Alberta’s energy minister, Ken Hughes, said recently at the inaugural session of the Canadian Energy Research Institute’s (CERI) annual petrochemical conference in the Canadian province. “We are working towards exporting bitumen and LNG to Asia and we will now need to add chemicals to that portfolio.” Hughes’ statement came against the backdrop of an anticipated return of North America as a competitive supplier of petrochemical products by 2018-19, when ‘mega’ new facilities are due to be commissioned in the US. “We see a reinvigoration of investments in North America, as companies take advantage of low ethane feedstock prices from the rapid development of the shale gas industry,” a vice president with Houston-based IHS Chemical, Mark Eramo, said at the event.
Since March this year, two new mega projects have been announced in the US. The first is a petrochemical complex to be built by Shell Chemical, including PE and mono-ethylene glycol (MEG) units, in the Appalachian region. The second is a project planned by ExxonMobil Chemical, which will construct a 1.5 million tonne per year ethylene plant at its Baytown, Texas, olefins complex and two PE units, each with a capacity of 650,000 tonnes per year. Shell and ExxonMobil are joining companies including Dow Chemical, Chevron Phillips Chemical and Formosa Plastics in pursuing greenfield projects to expand ethylene and polymers production in the US. Other companies including Ineos, LyondellBasell, Williams, Westlake Chemicals and Nova Chemicals of Canada are planning brownfield expansions, debottlenecks and/or retrofits to add ethane consumption capacity and increase ethylene production. If developed, the proposed expansions would raise US ethylene production by nearly 10.5 million tonnes per year, Eramo said. In comparison, by 2018-19 in the Middle East and North Africa, around 14 million tonnes per year of new capacity will be added once new projects are commissioned by joint ventures among Saudi Basic Industries Corp. (Sabic), Abu Dhabi Polymers Company (Borouge), Sadara Chemical Co., Qatar Petrochemical Co. and the Qatar Petroleum/Shell Group mega-plant, to name a few. Although no mega investments are planned in Alberta, the provincial government will initiate efforts to overcome the challenges of making available ethane and natural gas liquids (NGL) feedstock at ‘competitive’ prices. “We will be more engaged, pragmatic and do all that is necessary to provide ethane feedstock for petrochemical producers. One of our biggest new sources will be offgas [a mixture of ethane, propane and pentane] from the bitumen and heavy oil upgraders,” Hughes said.
In the Middle East, onsite construction work is under way at the Sadara project in Saudi Arabia – which will produce over 3 million tonnes per year of 26 specialist chemicals from three multi-feed crackers. Meanwhile, earlier this year, Shell signed a heads of agreement (HoA) with Qatar Petroleum to develop a petrochemicals plant at Ras Laffan at an estimated cost of US$6.4 billion. The agreement set out the scope and commercial framework of the project, which would include a steam cracker and a MEG plant with a capacity of 1.5 million tonnes per year. The complex will be designed to produce 300,000 tonnes per year of linear alpha olefins as well. “We have been holding discussions for [a long time] with ExxonMobil, Total and Shell for the facility, as there is a growing demand in Asia and the Far East for such exotic products. The Shell project signals our entry into the next generation of chemical products,” Sallatt said. More downstream project activity is also planned by Qatar Petroleum. In February this year, Qatar Petroleum put pen to paper on another HoA with Qapco to develop a new mega petrochemical complex at Ras Laffan. The complex will include a world-scale steam cracker and will produce 1.4 million tonnes per year of ethylene, 850,000 tonnes per year of high-density polyethylene (HDPE), 430,000 tonnes per year of linear low-density polyethylene, 760,000 tonnes per year of polypropylene and 83,000 tonnes per year of butadiene. The project is scheduled for completion in 2018. “Undoubtedly, the Middle East will always be ahead of the game, but there is still a chance of competition from North American producers,” a managing consultant with Calgary-based Purvin & Gertz, Gerry Goobie, said. “[The] delivered price of chemicals into Asia will be a deciding factor.”
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Previously...
Turkmen oil sector aims high Putin defends Russia's unconventional gas stance Alaska seeks increased oil production through tax break Australia suffers for now Overcoming hurdles: Iraq’s oil renaissance Challenges abound for methane hydrate development Chinese upstream efforts in Afghanistan ready to bear fruit Deciphering the global ethanol market PDVSA and the post-Chavez era Europe pins hopes on opening Southern Gas Corridor Bulgarian power politics bring down government Israel ahoy: first gas starts flowing through the pipes Europe's evolving gas markets and the Russia-Ukraine dispute Brazil prepares to join the shale revolution Shell review fuels debate over Arctic drilling LNG momentum steps up in Mozambique EU gaining interest in the Eastern Med, says commissioner Japanese refineries look overseas for investment opportunities Water shortage could drown China's shale gas hopes Off the human footprint Debt mountain casts shadow over PDVSA production plan Uganda: Deadlock, delays and dishonesty Mixed messages for Australian coal LNG supply landscape fogged by US uncertainties, says BG EU sanctions on Iranian gas exports will have limited impact Gazprom-EU standoff turns political Brazilian shale potential struggles to emerge Saskatchewan pushes to drive up output Libyan insecurity spills into terrorism Australia's LNG sector set for a slow-down post 2020 Trans-Pacific Partnership meets to focus on rules for SOEs The future for Polish renewables Argentina's unconventional conundrum BP's Mediterranean assets hold out hope Asian market gloom Poland's bittersweet victory in the battle for CO2 permits UK report gives 'green light' for shale gas development Saskatchewan pipeline safety in the spotlight Alberta aims for GHG reduction despite oil sands boom Middle East petchem industry faces North American competition An uncertain road ahead for Nabucco PTTEP pips Shell in Cove Energy bid Uphill struggle predicted for shale developments in China Support sought to prevent UK offshore wind blowing off course Brazil shelves shale plans to focus on subsalt Insecurity in the Sahel Uncertain signals from Indonesia South Korean shipyards buoyed by LNG vessel orders Russia loses out to Chinese influence in Mongolia Qatar, Kuwait worst-placed for Strait of Hormuz closure Capstone Turbines helping to boost associated gas utilisation in Russia Canada maintains unconventional exploration push Warrego sees shale promise in Western Australia Sluggish EUA market now wants to see details of setting aside Harvesting Ghana's hydrocarbon wealth presents opportunities Falklands oil push exposes Argentine energy misfortunes India faces Farsi ultimatum China's North American investment spree continues with BC deal Renewables deal flow to grow Colombia's 2012 growth prospects belie trouble Goodnight, and Goodluck: Nigeria's fuel price struggle The Sino-US trade conundrum Saudi awaits accurate estimate of unconventional gas resources Venezuelan opposition sets out intentions 20WPC - showcasing Qatar, GTL Russia facing challenges in gas talks with China |
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