As demand from power-plants grows for natural gas, Gulf petrochemical makers turn to naphtha as feedstock

03-Aug-10

Gulf petrochemical producers in the Middle East have traditionally preferred cheaper home-produced natural gas. They are beginning to make the switch to naphtha as a feedstock amid growing power-plant demand for natural gas, as per Bloomberg. New power plants are competing for those gas supplies, fuelling demand for alternatives. The situation is being aggravated as the UAE and Saudi Arabia expand petrochemicals production to reduce dependence on crude exports and require gas for power generation as well. Abu Dhabi plans to build the Middle East's first plant that would only use naphtha as feedstock. Saudi Arabia may develop similar units as part of two refinery ventures, including Rabigh Phase II Project. Abu Dhabi plans to shift new petrochemical plants near an oil refinery in the Ruwais industrial area, to gain more direct access to the refinery by-products that would feed its crackers. Middle East energy use may rise 60% in the next 20 years, according to International Energy Agency.