High oil prices have given a further lift to the profitability of Middle East petrochemicals producers with access to gas feedstock, the MEED Middle East Petrochemicals 2012 conference was told this morning.
“The cost per tonne of ethylene production rises with oil prices, but this is not so marked in the Middle East due to the feedstock pricing advantage enjoyed by producers with access to gas,” Nexant Vice President for the Middle East Graham Hoar said. “Industry profitability is still under pressure in Europe but it is better in the US and good in the Middle East. There has been excellent profitability in the Gulf region.”
World oil prices averaged more than $100 a barrel in 2011 and have traded around $120 for most of the first quarter of 2012.
Hoar said that the economics of petrochemicals is now moving back in favour of US-based producers. He said that US ethane production is growing and it is beginning to displace other feedstocks for petrochemicals firms. “Some 81 per cent of US crackers are light feedstock capable,” Hoar said. Hoar said that it is now more profitable to make petrochemicals in the US rather than in Europe.
Hoar said that Middle East net trade will rise to 40 million tonnes by 2015. This compares with under 35 million tonnes in 2012. The Middle East is to remain a net exporter of petrochemicals with the exception of benzene. Hoar said that global demand is supported by developing markets.
“The growth potential in China, Asia Pacific and other emerging markets is very strong,” Hoar said. “This is what will drive the world market in the future.”
Hoar said that Nexant forecasts demand for polyolefins in China is forecast to grow to 25 million tonnes in 2020 from just over 10 million tonnes in 2011.
More than 20 industry experts and practitioners will address the MEED Middle East Petrochemicals 2012 conference. They include National Industrial Company (Natpet) president and chief operating officer Jamal Malaikah, Sahara Petrochemicals Company managing director and chief executive officer Esam Hindy and Ahmad Al Ghamdi, general manager for technical affairs at Tasnee.