Middle East petrochemical producers are not a real threat to Indian companies and they will still be able to compete, Makarand Dixit, head of marketing at India's ONGC Petro additions Limited, said Tuesday.
Much has been said about rising competition from Middle East producers, who use cheap ethane gas as feedstock -- compared to mainly naphtha-based steam crackers in Asia -- but Dixit said he expects the impact to lessen over the next two years.
"The next two years will be tough for Indian producers. But the Middle East is not a real threat," Dixit said at the Indian Petrochem 2010 conference in Mumbai Tuesday.
He pointed out that while cheap ethane feedstock was the main driver for Middle East capacity in the past, there have been no new ethane allocations for new petrochemical projects in Saudi Arabia, for instance, since 2006.
Ethane in the Middle East was now being diverted more to power generation and water desalination plants, he said, adding that new petrochemical projects there were now based on mixed feeds -- ethane and LPG -- signaling a shift. In addition, several petrochemical projects in the Middle East had been delayed or were operating at lower rates due to non-availability of ethane feedstock or technical issues, he said but did not provide details.
As Middle East producers balance domestic demand for natural gas with that for steam crackers, the feedstock is becoming increasingly costlier for ethylene producers, Platts reported previously.
"The Middle East's ethane-based capacity will be only 16% of global ethylene capacity. So prices will still be determined by high consumption regions like China, Europe and Southeast Asia. The Middle East will be price takers, not price leaders," Dixit said.
OPaL is currently building a mega petrochemical complex at Dahej, Gujarat, which is expected to come online in the first quarter of 2013. The complex comprises a dual-feed steam cracker with an annual production capacity of 1.1 million mt of ethylene and 340,000 mt of propylene, and several downstream plants with a total production capacity of almost 2 million mt/year.
Much has been said about rising competition from Middle East producers, who use cheap ethane gas as feedstock -- compared to mainly naphtha-based steam crackers in Asia -- but Dixit said he expects the impact to lessen over the next two years.
"The next two years will be tough for Indian producers. But the Middle East is not a real threat," Dixit said at the Indian Petrochem 2010 conference in Mumbai Tuesday.
He pointed out that while cheap ethane feedstock was the main driver for Middle East capacity in the past, there have been no new ethane allocations for new petrochemical projects in Saudi Arabia, for instance, since 2006.
Ethane in the Middle East was now being diverted more to power generation and water desalination plants, he said, adding that new petrochemical projects there were now based on mixed feeds -- ethane and LPG -- signaling a shift. In addition, several petrochemical projects in the Middle East had been delayed or were operating at lower rates due to non-availability of ethane feedstock or technical issues, he said but did not provide details.
As Middle East producers balance domestic demand for natural gas with that for steam crackers, the feedstock is becoming increasingly costlier for ethylene producers, Platts reported previously.
"The Middle East's ethane-based capacity will be only 16% of global ethylene capacity. So prices will still be determined by high consumption regions like China, Europe and Southeast Asia. The Middle East will be price takers, not price leaders," Dixit said.
OPaL is currently building a mega petrochemical complex at Dahej, Gujarat, which is expected to come online in the first quarter of 2013. The complex comprises a dual-feed steam cracker with an annual production capacity of 1.1 million mt of ethylene and 340,000 mt of propylene, and several downstream plants with a total production capacity of almost 2 million mt/year.
