More and more Middle East-based ethylene producers are shifting to naphtha as a feedstock for producing ethylene.
The reasons for the shift are that the region itself is struggling with low ethane content natural gas, a marked increase in the capacity of downstream ethylene products, and soaring demand for gas for industrial and domestic purposes, senior industry sources said this week.
According to an estimate from New York based Alembic Global Advisors, an industry advisory group, while Saudi Arabia will have an installed capacity to produce 13.29 million tons of ethylene by the end of this year, its gas and natural gas liquids, or NGL supplies will only just be able to meet 10.22 million tones, or 77%, of this capacity.
"Saudi Arabia is running short of NGLs and is now considering heavier feeds like naphtha for further chemical expansions. Not surprisingly no new ethane allocations have been made to the chemical industry in Saudi Arabia since early 2006," said Hassan I. Ahmed, head of research at Alembic Global Advisors.
Another problem in the region is rich reserves of gas with low ethylene content. According to Hassan, the percentage of ethane in associated gas in the region ranges between 3-12% for associated gas and 1-8% for non-associated gas.
"In future we will focus more on liquids [as s feedstock for olefins in Saudi Arabia]. It has become feasible to do more naphtha-based ethylene plants," the Chairman and CEO of Saudi Arabia Basic Industries Corporation, or SABIC, Mohamed Al Mady said at an industry event in Dubai last week.
Later, Khalid Al Falih, the CEO of Saudi Aramco, the company that supplies feedstock gas and naphtha to SABIC, said that his company is gearing up to meet the rising naphtha demand in Saudi Arabia.
"We are going ahead with the $20 billion olefins project with Dow Chemicals in Jubail. Besides, work is progressing on the 400,000 b/d joint refinery being constructed by Aramco and Total in Jubail," Al Falih replied when asked whether his company is committed to meet naphtha requirements in Saudi Arabia.
Besides Saudi Arabia, other significant developments for naphtha-based ethylene crackers are happening in Abu Dhabi and Kuwait.
For example, the UAE's Chemaweyaat feeds its 10 million mt/year ethylene and downstream capacity complex in Abu Dhabi entirely on naphtha. Kuwait's Petrochemical Industries Company is expected to run its proposed 1.4 million mt/year capacity Olefins 3 cracker in Shuaibah Industrial Area, Al Ahmadi "mostly on naphtha." "The plant will also use ethane, but naphtha will be the main feedstock," Hamad Al Terkait, the President and CEO of EQUATE in which PIC holds a 42.4% stake earlier told Platts. --Shashank Shekhar
The reasons for the shift are that the region itself is struggling with low ethane content natural gas, a marked increase in the capacity of downstream ethylene products, and soaring demand for gas for industrial and domestic purposes, senior industry sources said this week.
According to an estimate from New York based Alembic Global Advisors, an industry advisory group, while Saudi Arabia will have an installed capacity to produce 13.29 million tons of ethylene by the end of this year, its gas and natural gas liquids, or NGL supplies will only just be able to meet 10.22 million tones, or 77%, of this capacity.
"Saudi Arabia is running short of NGLs and is now considering heavier feeds like naphtha for further chemical expansions. Not surprisingly no new ethane allocations have been made to the chemical industry in Saudi Arabia since early 2006," said Hassan I. Ahmed, head of research at Alembic Global Advisors.
Another problem in the region is rich reserves of gas with low ethylene content. According to Hassan, the percentage of ethane in associated gas in the region ranges between 3-12% for associated gas and 1-8% for non-associated gas.
"In future we will focus more on liquids [as s feedstock for olefins in Saudi Arabia]. It has become feasible to do more naphtha-based ethylene plants," the Chairman and CEO of Saudi Arabia Basic Industries Corporation, or SABIC, Mohamed Al Mady said at an industry event in Dubai last week.
Later, Khalid Al Falih, the CEO of Saudi Aramco, the company that supplies feedstock gas and naphtha to SABIC, said that his company is gearing up to meet the rising naphtha demand in Saudi Arabia.
"We are going ahead with the $20 billion olefins project with Dow Chemicals in Jubail. Besides, work is progressing on the 400,000 b/d joint refinery being constructed by Aramco and Total in Jubail," Al Falih replied when asked whether his company is committed to meet naphtha requirements in Saudi Arabia.
Besides Saudi Arabia, other significant developments for naphtha-based ethylene crackers are happening in Abu Dhabi and Kuwait.
For example, the UAE's Chemaweyaat feeds its 10 million mt/year ethylene and downstream capacity complex in Abu Dhabi entirely on naphtha. Kuwait's Petrochemical Industries Company is expected to run its proposed 1.4 million mt/year capacity Olefins 3 cracker in Shuaibah Industrial Area, Al Ahmadi "mostly on naphtha." "The plant will also use ethane, but naphtha will be the main feedstock," Hamad Al Terkait, the President and CEO of EQUATE in which PIC holds a 42.4% stake earlier told Platts. --Shashank Shekhar
