Increasing number of gas rich Middle East based ethylene producers shifting feedstocks

17-Dec-10

An increasing number of ethylene producers from gas rich Middle East are shifting to naphtha as a feedstock, as per Platts. The region is struggling with low ethane content natural gas, a significant increase in the capacity of downstream ethylene products, and soaring demand for gas for industrial and domestic purposes. According to an estimate from New York based Alembic Global Advisors, an industry advisory group, while Saudi Arabia will have an installed capacity to produce 13.29 mln tons of ethylene by the end of this year, its gas and natural gas liquids, or NGL supplies will only just be able to meet 10.22 mln tons, or 77%, of this capacity. "Saudi Arabia is running short of NGLs and is now considering heavier feeds like naphtha for further chemical expansions. Not surprisingly no new ethane allocations have been made to the chemical industry in Saudi Arabia since early 2006," said Hassan I. Ahmed, head of research at Alembic Global Advisors. Another problem in the region is rich reserves of gas with low ethylene content- the percentage of ethane in associated gas in the region ranges between 3-12% for associated gas and 1-8% for non-associated gas. "In future we will focus more on liquids [as s feedstock for olefins in Saudi Arabia]. It has become feasible to do more naphtha-based ethylene plants," the Chairman and CEO of SABIC. The CEO of Saudi Aramco, supplier of feedstock gas and naphtha to SABIC, said that his company is gearing up to meet the rising naphtha demand in Saudi Arabia. Saudi Aramco is proceeding with the US$20 bln olefins project with Dow Chemicals in Jubail. Work is underway on the 400,000 bpd joint refinery being constructed by Aramco and Total in Jubail. Significant developments for naphtha-based ethylene crackers are underway in Abu Dhabi and Kuwait : UAE's Chemaweyaat feeds its 10 mln tpa ethylene and downstream capacity complex in Abu Dhabi entirely on naphtha. Kuwait's Petrochemical Industries Company is expected to run its proposed 1.4 mln tpa capacity Olefins 3 cracker in Shuaibah Industrial Area, "mostly on naphtha." The plant will also use ethane, but naphtha will be the main feedstock.