Saudi Arabia petrochemical output in Jubail disrupted by power outage

SINGAPORE (ICIS)–Several producers in Saudi Arabia are facing production issues due to disruptions at upstream feedstock suppliers in Al Jubail due to a power outage in early August.

The sudden cut in feedstock supply has raised concerns over the near-term availability of several products, with potential delays of export allocations of some products to customers in India.

Uncertainty lingers on how soon the affected producers will resume normal production levels.

Supply of ethane to petrochemical complexes in Jubail was disrupted, market sources said, citing a power outage at feedstock supplier Saudi Aramco.

ICIS reached out to Saudi Aramco to check on the issue but has yet to receive a reply at the time of writing.

Ethane is the primary feedstock for most petrochemical producers in Saudi Arabia instead of naphtha. In 2019, several petrochemical producers had to cut their output after Saudi Aramco’s oil facilities were attacked, resulting in a shortage of ethane gas supply.

This week, operations are slowly resuming at most affected facilities although the extent of the disruption at downstream facilities at Jubail in Saudi Arabia’ east coast was not immediately clear, according to market sources.

“C2 [ethylene] and PE [polyethylene] production [is] impacted due to this,” said an industry source.

Saudi Ethylene and Polyethylene Company (SEPC)  shut its 1m tonne/year cracker early in the month and reduced its polyethylene (PE) output due to the power outage.

SEPC, which is 45.34% owned by Saudi Arabia’s National Industrialization Company (Tasnee), can produce 450,000 tonnes/year of low density PE (LDPE); 400,000 tonnes/year of high density PE (HDPE); and 285,000 tonnes/year of propylene in Jubail.

In the PE market, Saudi Polymers raised its August HDPE offers last week to an equivalent of $1,293/tonne DEL (delivered) Saudi Arabia for cash payments.

Market sources said that the company’s HDPE allocation was hit, noting that its offer was $53/tonne higher than prices announced by other producers.

Saudi Polyolefins Co (SPC), another Tasnee subsidiary, has lowered its polypropylene (PP) output.

Tasnee on 10 August announced a force majeure on delivery of butyl acrylate (butyl-A) due to a shortage of feedstock supply, according to a letter the company sent to customers.

The force majeure is estimated to continue up to end-August based on preliminary assessment, it stated.

Tasnee is one of the major butyl-A suppliers to India. Import discussions in India have risen this week on keen enquiries.

Production at the company’s acrylic acid (AA) unit in Jubail was also affected due to disruption of feedstock propylene supply.

Jubail United Petrochemical (JUPC), meanwhile, has cut run rates at its 1.45m tonne/year cracker in early August, while its two monoethylene glycol (MEG) units with a combined capacity of 1.34m tonnes/year were shut at around the same time.

The MEG plants are expected to resume production within this week, market sources said.

Another MEG producer, Eastern Petrochemical Co (SHARQ) also reduced production but there has been no major supply disruption to its customers, market sources said.

At Saudi Methacrylates Company (SAMAC), methyl methacrylate (MMA) production was affected by disruption in supply of raw material ethylene, market sources said.

Operating rates at its 250,000/tonne plant are currently not known, but market players are wary of a possible supply problems in the near term.

International Vinyl Acetate Co (IVC) shut its vinyl acetate monomer (VAM) plant due to feedstock shortage.

The shutdown will tighten global VAM supply further. The IVC outage was preceded by reduced VAM output in Singapore and an unplanned plant outage in South Korea.

In the US, LyondellBasell’s VAM plant in La Porte, Texas has yet to resume operations after an acetic acid leakage.

In the methyl tertiary butyl ether (MTBE) market, a northeast Asian end-user earlier this week received a notice from its Saudi Arabia-based supplier that loading of a contract volume shipment in September has a “high probability” of being delayed.

As such, the cargo would miss its originally scheduled delivery window by end of October, resulting in additional spot demand for MTBE arriving within October.

Although Saudi Arabia is a major supplier of MTBE to Asia, the region’s demand-supply balance can be cushioned by high inventory currently held by end-users.

Focus article by Nurluqman Suratman

Photo: SPEC Cracker in Jubail (Source: Tasnee)

With additional reporting by Veena Pathare, Li Li Chng, Helen Lee, Judith Wang and Keven Zhang