Petchems set to make up half of global oil demand growth to 2050 - IEA

Source: ICIS News


LONDON (ICIS)--The petrochemicals sector is expected to become an increasingly dominant force in the crude oil industry as it will represent nearly half of global crude oil demand growth to 2050, according to the International Energy Agency (IEA) on Friday.

Petrochemicals currently account for 14% of global oil consumption – around 13m bbl/day – and 8% of gas usage, making it the largest industrial energy consumer.

The sector is set to boast the strongest growth in oil consumption of any industry in coming decades, greater even than the automotive and aviation markets, comprising over a third of crude demand to 2030 and nearly half to 2050, according to IEA estimates.

The petrochemicals industry's crude oil consumption is expected to jump to nearly 20m bbl/day over the next 32 years, while gas consumption is expected to grow by 56bn cubic metres (cbm)/day, and 83bn cbm/day by 2050.

“Petrochemicals are one of the key blind spots in the global energy debate, especially given the influence they will exert on future energy trends,” said the IEA's executive director Fatih Birol.

The extent of the anticipated growth in petrochemicals is driven by demand for plastics, outpacing all other bulk materials, along with the US’ strengthening position as a low-cost producer, and the scale of new projects announced in the Middle East.

Despite the growth of alternative feedstock sources, particularly in light of the increasing prominence of circular economy-related initiatives, limited availability of cost-effective substitutes for fossil fuels means that crude oil demand from the industry is likely to remain resilient.

Large state and private oil and gas players are increasingly investing in their petrochemicals operations in anticipation of global crude demand plateauing at some point in the next few decades.

The Abu Dhabi National Oil Company (ADNOC) is investing $45bn in a new refinery and petrochemicals complex in the UAE.

Fellow Middle Eastern player Saudi Aramco has brokered two joint ventures at Petronas’ Refinery and Petrochemical Integrated Development (RAPID) complex worth billions, new investments at its Total SATORP joint venture refinery in Al Jubail and a potential stronger push into the feedstock-advantaged US Gulf Coast.

Despite standing as the world’s largest industrial energy consumer, the petrochemicals sector is only the third-largest carbon dioxide (CO2) emitter due to the proportion of those materials not undergoing combustion.

The extent of the projected oil and gas demand growth from the sector is likely to drive an increase in CO2 emissions from the sector by 20% to 2030 and 30% to 2050.

Without improved collection and sorting methods, the quantity of polymers drifting into oceans is also likely to increase, if the industry does not invest in adhering to the UN sustainability goals.

Pictured: Construction of a polypropylene (PP) plant in China
Source: Roman Pilipey/EPA-EFE/REX/Shutterstock