Nothing is more indicative of the region’s struggle to source ethane than the decision of a country with the world’s fifth-largest natural gas reserves to turn to oil-derived feedstock.
Abu Dhabi has chosen naphtha as the key input for the $20bn Chemaweyaat facility at Taweelah - its largest ever petrochemical investment.
During production, the plant will consume more than 6 million tonnes a year (t/y) of naphtha, which given that the country exports 8 million t/y, will not be difficult to find.
This switch is happening despite naphtha being a more expensive commodity to source than ethane - even domestic consumers are expected to have to pay prices that are broadly in line with market rates.
Unlike ethane, naphtha is an export commodity and so trade agreements demand that prices are not falsely suppressed in domestic markets. It is also an oil-derived product so it rises and falls with the price of crude.
Other markets such as Saudi Arabia and Qatar are making the same feedstock switch, and are confident that benefits of job creation and product diversification will make the project economics stack up.
But they will still have to work harder than ever before to demonstrate the cost advantages of their strategy to bankers and secure the enormous financing commitments that are required.
Index of all stories
Production: Feedstock shortage hits Gulf
Contractor survey: Project market slows
Abu Dhabi: Closing the gap on regional giants
Project finance: Getting clever with credit
Logistics: Strengthening the supply chain
Online-only: Petrochemicals project table (Excel)
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