SABIC to raise MEG supply with new oxygen unit

17 January 2008 12:38  [Source: ICIS news]

LONDON (ICIS news)--The start-up of a new oxygen unit in early February at Al-Jubail in Saudi Arabia will enable SABIC’s monoethylene glycol (MEG) supply to normalise, a company source said on Thursday, following six months of disruption that saw record high prices.

 

“With the start up of the new unit, our oxygen allocation issue will be resolved and normal MEG production can be reached,” added the source.

 

The damaged oxygen unit should also be repaired by March/April time, which would then allow the start up of a new MEG line, possibly in June, said the source.

 

The unplanned issue was a major reason for the huge upturn in global MEG costs that saw European bulk prices move up close to €1,200/tonne ($1,765/tone) CIF (cost, insurance, freight) NWE (northwest Europe) by October, from the mid-€700s/tonne CIF NWE in August.

 

Chinese spot prices rose to the high $1,600s/tonne CFR (cost and freight) China Main Port (CMP) in November, from below $1,000/tonne CFR CMP in August.

 

The subsequent increases on the Asian contract were a major reason for the record high European contract price agreed in December at €1,205/tonne FD (free delivered) NWE.

 

On 6 August a technical problem - widely reported as an explosion - at National Industrial Gas Co in Al-Jubail caused a disruption to oxygen supply, a key component in the production of MEG and ethylene oxide (EO).

  

Wholly-owned SABIC (Saudi Basic Industries Corp) subsidiary Jubail United Petrochemical operates two MEG units at Al-Jubail with a nameplate capacity of 750,000 tonnes/year each.

 

The major also owns three other MEG units at the same site in a joint venture with a Japanese consortium led by Mitsubishi Chemical and Mitsubishi Corp.

 

The first two units at joint venture Eastern Petrochemical Co (Sharq) have a nameplate capacity of 450,000 tonnes/year each and the No 3 unit can produce 500,000 tonnes/year of MEG.

 

Eastern Petrochemical Co’s new unit at the site was due to have a nameplate capacity of 700,000 tonnes/year, according to ICIS plants and projects.

 

The priority would be to rebuild stocks, said the source.  

 

($1 = €0.68) 

By: Edward Cox
+44 20 8652 3214

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