High oil gives Mideast petchems a double boon – consultant

24 March 2011 22:38  [Source: ICIS news]

HOUSTON (ICIS)--High crude oil prices will increase margins and boost feedstock supplies for Middle Eastern petrochemical producers, already the lowest cost players in the world, a US consultant said on Thursday.

Many Middle Eastern petrochemical producers rely on ethane as a feedstock instead of naphtha.

The Middle East derives much of its ethane from associate gas, so called because it is produced in association with crude oil.

Higher oil prices will encourage the Middle East to produce more crude.

As a result, ethylene margins expand as oil prices rise, said Tony Potter, managing director of the Middle East and India for Chemical Market Associates Inc (CMAI).

Potter made his comments during CMAI's World Petrochemical Conference.

As oil production rises, so does ethane production, but such a trend will not lead to massive increases in ethane supplies.

Saudi Arabia may increase production of its heavier crude as a result of higher oil prices, but heavy crudes typically do not produce as much associate gas as lighter grades, Potter said.

The CMAI conference lasts through Thursday.

By: Al Greenwood
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