Most Saudi petrochem producers use ethane because of government subsidies that mark it below market prices, and also at values cheaper than other feedstock such as propane and naphtha. World number one petrochemical maker- Saudi Basic Industries Corp, is switching feedstock to propane and naphtha. This switch will enable the petrochem major to recompense for reduced supply of natural gas in Saudi Arabia, as Bloomberg. The rapid growth of Saudi Arabia’s economy and population in recent years has led the government to divert greater quantities of ethane to power plants to use as fuel for generating electricity. This practice has reduced the availability of the gas for petrochemical manufacturers.
Sabic plans to boost its consumption of propane and naphtha to fulfill its expansion plans, Mutlaq Al Morished, according to SABIC’s executive vice president for corporate finance. He declined to give details of the expansion.
Saudi Arabia is expected to spend US$31.4 bln through 2015 on improving gas supplies. Of that amount, US$24 bln will go toward downstream projects and gas based petrochemicals and fertilizers, according to Arab Petroleum Investments Corp. The percentage of natural gas in oil fields in Saudi Arabia has been declining steadily. Though efforts are underway by Saudi Aramco to boost natural gas production, a near-term ethane shortage is expected.