Riyadh
Source of picture: help.berberber.com
By John Richardson
PRIVATE Saudi Arabian petrochemical companies need not fret about the ethane-gas shortage that two sources had last week told us would hold up their development, according a third industry source we spoke to today, who is based in the Middle East.
“The private companies I’ve spoken to recently, all see a bright future for themselves in investing in more differentiated downstream products,” this third source added.
“The objective is to broaden the range of petrochemicals produced in the Kingdom order to create more downstream jobs. This doesn’t necessarily mean having to build a cracker.
“More differentiated petrochemicals, such as acetyls, tend to be smaller in scale than your standardised polyethylene (PE) and mono-ethylene glycol (MEG) plants and there is plenty of spare ethylene within the Saudi system.”
The private company Sipchem, for example, decided to cancel its proposed cracker because of mounting costs and the availability of spare C2s, he added.
“It only needs around 250,000 tonne/year of ethylene for its acetyls projects, which are in the process of being brought on-stream right now at Al-Jubail.
And interestingly, more spare propylene might become available if any of Saudi Arabia’s four propane dehydrogenation-polypropylene (PP) producers decide to expand.
“Each of the plants has the feedstock allocation to raise C3s output by 20%, but they might not also increase PP capacity.
“And we could be talking about cross share-ownership by feedstock suppliers in some of these downstream projects. If not, discount or transfer pricing arrangements for feedstock off-take are still likely.”
As for the Saudi Aramco strategy of potentially cracking naphtha, the source said: “Aramco is losing huge amounts of money on its refinery operations when it sells products locally because of subsidised pricing for gasoline, diesel etc.
“So adding naphtha-based petrochemicals will result in better returns, even if they are weaker than cracking ethane.”