Published on July 9, 2014

Gas shortage has put a stop to several petrochemical projects in Egypt. Lack of sufficient natural gas has pushed the government to focus on projects that rely on naphtha.

Projects that have been affected include a fertilizer complex in the industrial zone west of Damietta port. The USD 2.2 billion project is expected to have a production capacity of 2 million tonnes of urea per year.

A polystyrene complex in Dekheila port in Alexandria worth USD 408 million, with a production capacity of 200,000 tonnes per year, has also been delayed. Another project affected by the gas shortage is a USD 1.6 billion ethylene and derivatives project in the Western Desert with a production capacity of 460,000 tonnes per year of ethylene. These two projects were to enter the testing stage in the first half of 2014, which has now been pushed back to the first quarter of next year.

The Ministry of Petroleum has decided to focus their attention on naphtha-based projects. It is likely that a project for a complex to produce benzene, propylene and polyethylene by the end of this year. This USD 2 billion project is expected to be located in Suez Gulf Industrial Zone and will be completed in three phases by 2016.

New gas discoveries will add nearly 500 million cubic feet (cft) per day to the existing capacity, which the government hopes to achieve by the end of 2014. This increase in capacity is crucial in meeting the ever-increasing demand.

This will help the ministry set up a USD 6 billion olefins complex that would use natural gas. The Petroleum Ministry also intends to implement the national petrochemical plan by 2020, which is expected to include 24 projects with investments of USD 25 billion.

These projects once completed would bring in a revenue of USD 16 billion per year through production of 20 million tonnes of petrochemical products.

One of the key projects under the this plan is the Ethylene and Derivatives Company  as this would double Egypt's ethylene capacity with an additional 460,000  tonnes per annum. The said project would also include a 400,000 tonnes per year polyethylene plant and a 20,000 tonnes per year butadiene extraction plant. It was scheduled to commence operations in late 2014.

The second stage of the national plan involves constructing a gas-to-olefins complex with a combined production capacity of one million tonnes per year of ethylene and propylene, as well as one million tonnes per year of combined polyethylene and polypropylene capacity.

The government is also considering USD 1.75 billion aromatics complex with a production capacity of 530,000 tonnes per day of para-xylene and 350,000 tonnes per day of benzene.

The last phase of the plan includes constructing another propylene and polypropylene plant, a third olefins complex and a styrenic complex. The government also intends to set up downstream clusters that will manufacture products from plastics and petrochemicals.