07 December 2012 13:12 [Source: ICIS news]
LONDON (ICIS)--The European naphtha market will remain fundamentally well supplied and the feedstock of choice for refiners in the medium term, as ethane is yet to get a foothold in Europe, a senior consultant said at a conference on Thursday.
Speakers at the ICIS Refining and Petrochemical Conference in London on 6 November said the advent of shale gas in the US was changing the market, but that the shift was yet to be felt in Europe.
Jeremy Redenius, an analyst with US sell-side research firm Sanford Bernstein, said that ethane crackers in the US have become much more profitable than their naphtha cracker counterparts.
“The US industry has shifted cracking feedstocks from naphtha to ethane, which has reduced the production of co-products such as propylene, butadiene and aromatics,” he said
However, shale gas is still a few years away in Europe, according to Andrew Monro, head of chemicals at KPMG in the UK.
“The UK government will likely accelerate shale gas exploration in the UK and it should be ready to go in the next few years, it is likely Germany will follow suit. However France may not, due to environmental concerns,” Mr Monro said.
According to senior consultant Stefano Zehnder of ICIS Consulting, Europe will remain well supplied for naphtha for the time being, with Russian and North African exports adding to European refinery capacity.
He said: “Naphtha is still the main feedstock for ethylene, but ethylene production will not increase naphtha requirements.
“As gasoline demand is declining, more naphtha is available to the petrochemical sector. Fundamentally it is a picture of comfortable supply,” he added.
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