Sadara sees China PE demand improving in H2 2019

Source: ECN

2019/05/03

Saudi Arabia-based Sadara expects polyethylene (PE) demand in China to rebound in the second half of 2019 as economic sentiment improves, a company official said on Wednesday.

“Q1 was a rough part of the year but we believe we will see a rebound. In China, spot prices are up and we’re seeing less pushback from customers,” said a company official at a Saudi Aramco press tour.

“There’s a certain sense of optimism on the part of producers and buyers as well, which echoes for a better second half,” he added.

Sadara consists of 26 petrochemical units in Jubail Industrial City and is 65% owned by Saudi Aramco and 35% by US-based Dow. Sadara runs three linear low density PE (LLDPE) units with capacities of 970,000 tonnes/year, and a low density PE (LDPE) unit with capacity of 350,000 tonnes/year, according to the ICIS Supply and Demand Database.

Around 38% of Sadara’s PE output is exported to China, with much of it being C4 LLDPE for food packaging and film wrap, said the official.

The rest of Sadara’s PE exports are going into Europe, Africa and other countries in the Middle East, he noted.

For Sadara as a whole, 95% of its production is exported, a level it seeks to decrease as it develops the local Saudi Arabia market and attracts downstream customers to the adjacent PlasChem Park.

Sadara’s other products include ethylene, propylene, ethylene oxide (EO), butyl glycol (BG), amines, propylene oxide (PO), propylene glycol (PG), polyols and isocyanates.

On the feedstock side, Sadara operates 12 furnaces in its mixed feed cracker – seven using gas, and five liquids with three of those five able to switch between feeds, said the official.

Sadara is currently processing around 85,000 standard cubic feet (scf)/day of ethane, and 53,000 bbl/day of naphtha, for an approximate 60/40 ethane/naphtha mix, he added.

AMIRAL PROJECT PLANS

Saudi Aramco and Total’s proposed Amiral project next to its SATORP joint venture refinery and petrochemical complex in Jubail will include ethylene, propylene, isobutylene, polyethylene (PE) and polypropylene (PP) in its early plans, a SATORP official said on Wednesday.

“The project is in FEED (front end engineering and design) mode, so it is not completely defined,” said the official at a Saudi Aramco press tour.

In January 2019, Aramco and Total announced a memorandum of understanding (MoU) with South Korea-based Daelim for Daelim to build an 80,000 tonne/year polyisobutylene (PIB) plant downstream from the Amiral project by 2024.

The $5bn Amiral project is targeted for completion in 2024 and will include a 1.5m tonne/year cracker using around 50% externally sourced ethane and 50% refinery offgases, the official said.

SATORP will supply the refinery offgases, while Amiral will provide hydrogen for the refinery, he added. Aramco anticipates another $4bn in investments by third parties downstream of the Amiral project in an adjacent “value park”.

SATORP itself is 62.5% owned by Saudi Aramco and 37.5% by France-based Total. Existing petrochemical capacities include 700,000 tonnes/year of paraxylene (PX), roughly 140,000 tonnes/year of benzene and 200,000 tonnes/year of propylene, said the official.

SATORP has expanded refining capacity to 450,000 bbl/day of Arabian heavy crude oil in recent years from its original design capacity of 400,000 bbl/day through “capacity creep”, said the official.

It plans to undergo a turnaround starting between March and June 2020 for four to six months to expand refining capacity by another 20,000 bbl/day, and will also debottleneck its FCC (fluid catalytic cracking) unit, which would expand propylene capacity by 10-15%, he added.

JAZAN REFINERY START-UPS

Saudi Aramco is set to start up its integrated Jazan refinery and petrochemical complex on the southwest coast of Saudi Arabia by the end of 2019, a company official said on Wednesday.

The 400,000 bbl/day Jazan refinery will include petrochemical capacities for benzene (250,000 tonnes/year) and paraxylene (PX, 850,000 tonnes/year).

The Jazan complex will be 100% owned by Saudi Aramco and be its second largest refinery and fourth wholly owned refinery, in addition to its units in Ras Tanura (550,000 bbl/day), Yanbu (250,000 bbl/day) and Riyadh (130,000 bbl/day).

Those three refineries have total capacity of 930,000 bbl/day and operated at a 99% utilisation rate in 2018, according to Saudi Aramco.

Saudi Aramco is on track to start up its clean fuels project to boost the quality of diesel and gasoline at its Ras Tanura refinery by 2021, an executive at the Saudi crude oil major said on Tuesday.

“The focus will be on treating diesel to have lower sulphur content, even down to 10 ppm [parts per million],” a senior engineering manager at the Ras Tanura refinery said, at a special press tour.

“Another focus is on the gasoline side where we will reduce benzene content and other harmful elements,” he added.

Aramco has already lowered sulphur content in diesel to around 500 ppm, he said. The diesel is mostly used as transport fuel for larger trucks domestically.

The clean fuels project involves adding a 90,000 bbl/day continuous catalyst regeneration (CCR) unit and an isomerisation unit to increase octane and reduce benzene content in gasoline.

“We are also looking at adding another diesel hydrotreater,” said the senior engineering manager.

The hydrotreater would reduce sulphur content in diesel. Part of the Ras Tanura refinery would be shut down for maintenance for 30-45 days in 2020 to prepare for the clean fuels project, he said.

On the gasoline side, some additional but unspecified capacity will be added from the clean fuels project, enough to use up most of the naphtha produced at Ras Tanura, another engineer at Aramco explained. ■