Oman postpones future petchem projects

27 February 2007 10:30  [Source: ICIS news]

DUBAI (ICIS news)--Gas shortages in Oman will not affect approved petrochemical investments but future projects have been postponed, the chief executive of Oman Polypropylene told ICIS news on Tuesday.

 

"The picture is not rosy but all current and approved projects have been allocated gas," said Mohammed Benayoune on the sidelines of the petrochemical conference in Dubai.

 

Unconfirmed reports surfaced last week that Oman's Ministry of Oil and Gas undersecretary, Nasir Al Jashmi, said the country was trying to secure imports of gas from multiple sources to preserve what reserves it had left to feed both the petrochemical and power industries.

 

Official figures from Muscate show that total gas demand in the sultanate is growing by an average of 7% annually. The shortfall has now resulted in a freeze on all new projects and expansion activities for crackers.

 

Benayoune said that his polypropylene line and other petrochemical plants in the country are running at full capacity and that the industry was hopeful about finding future reserves to feed expansion plans.

 

"We are optimistic that we will get more gas by 2009," he said.

 

Muscate is conducting a feasability study for a new oil refining and petrochemical complex in Duqum on the east coast.

 

An announcement on the outcome is expected in March and Benayoune confirmed that the project has a gas allocation that would feed a “worldscale” ethylene cracker and downstream derivative units, which includes a 1.5m tonne/year polypropylene plant.

 

Oman's dwindling feedstock is indicative of a trend throughout the Gulf with Saudi Arabia and Kuwait identified as facing gas shortfalls.

 

A report by Saudi Arabia-based investment firm Arab Petroleum Investments Corp (Apicorp) said that there was anecdotal evidence that good quality, low cost ethane is in short supply.

 

"Feedstock supply will be problematic in the future," said Ali Aissaoui, senior research officer at Apicorp.

 

"There is no hard evidence but power generation companies are beginning to move away from natural gas to alternative feeds, while crackers are using more mixed feedstock," he added.

 

That means crackers having to use heavier oil-based fractions compared with the more cost effective ethylene projects that use ethane gas.

 

Gas shortages are expected to push prices higher in the future across the Gulf, according to Apicorp, but would continue to be cost competitive compared with other regions.

By: Matt Kovac
+65 6780 4359

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