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.