IEA expects petchems will be further integrated into refining facilities
Watchdog says petchems will drive more than a third of oil demand growth by 2030
The International Energy Agency (IEA) expects petrochemicals to account for more than a third of growth in global oil demand by 2030 as companies in the Middle East and elsewhere further integrate petchems production into their refining facilities.
The Middle East region, particularly countries in the Arabian Gulf, are ramping up production of petrochemicals to extract more value from their energy resources and create a downstream industry.
“The push into the petrochemical industry in the region is in my view an excellent and timely move because it helps to diversify the economies [away] from crude oil export,” said Fatih Birol, executive director of the IEA, the Paris-based energy watchdog.
Gulf countries, particularly the UAE and Saudi Arabia, are leading efforts to integrate refining with petrochemical production.
State-owned Abu Dhabi National Oil Company revealed in May plans to invest Dh165 billion in downstream operations in partnership with global players over the next five years as the company looks to build the world’s largest integrated refining and petrochemicals facility in the emirate.
The chemicals segment in the emirate’s industrial city of Ruwais will see a trebling of production capacity from 4.5 million tonnes per annum to 14.4 mtpa by 2025, as plans get under way for the world’s largest mixed feed cracker. Saudi Aramco plans to nearly double its refining capacity to 10 million barrels per day and its petrochemical production by 2030.
The petrochemical sector, which is the “blindspot” of the oil market, is set for more mergers and acquisitions as oil companies seek to enlarge their chemicals portfolios, according to Mr Birol.
Aramco, the world’s biggest oil producing company, is in talks to acquire a stake in Sabic, the region’s biggest petchems producer.
The Middle East as a whole benefits from a low cost of production of primary chemical production, and has strong growth potential because only 7 million bpd out of a total of 28 bpd pumped in the region is refined, with the rest exported rather than used as feedstock for petrochemical production.
“The role of oil and natural gas as a feedstock will be a key one for many years to come in Middle East and the rest of the world,” said Mr Birol.
The expansion of petrochemical production in the region comes at a time when the world’s chemicals sector is set to account for more than a third of the global projected oil growth demand by 2030 or nearly 10 million bpd, according to the IEA.
Petrochemicals will also account for 7 per cent of global increase in gas demand by 2030.