APIC ‘07: ME ethane to be rationed, supply fears

17 May 2007 12:01  [Source: ICIS news]

TAIPEI (ICIS news)--The availability of cheap ethane gas in the Middle East will be limited as government's in the region become more selective about which projects to sanction because of long-term supply fears, said an expert Thursday.

 

The policy to ration the cheap feedstock for crackers will allow the gas to last for decades, said Patrick Rooney, managing director of the Middle East operations for consultants Chemical Market Associates (CMAI), on the sidelines of the annual Asian Petrochemical Industry Conference (APIC) in Taiwan.

 

"Ethane supply will last for many decades to come," he said in reference to government's scrutinising projects more closely. "Ethane is not running out, far from it."

 

The problem is the rate of investment in crackers is putting pressure on ethane's immediate availability, he said.

 

As a result of this, Rooney said Saudi Arabia is rationing the best projects, which are defined by how it helps diversify the industry, and creates jobs opportunities throughout the chemicals chain and into manufacturing.

 

He said governments would be closely monitoring ethane supplies before rubber stamping projects.

 

Future projects may well have to move towards cracking heavier feedstocks such as propane, gas oil, Butane, Offgas and naphtha, experts have predicted because of the ethane shortage.

 

Ethane is considered the feedstock of choice among investors because it is significantly cheaper than heavier sources, such as naphtha.

 

If government's hold back ethane supplies this could upset future investment warned a rival consultancy.

 

"That is bothering private capital in the Middle East which wants to invest on an ethane cost basis," warned George Intille, vice president of SRI Consulting in the US on the sidelines of the conference.

ICIS Copyright © Reed Business Information 2009

Author: Matt Kovac
+65 6780 4359

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