Published on December 3, 2014
The changing aspects of petrochemical industry have become pretty evident. The shale gas revolution has helped US bounce back into the game, the sluggish economy in China, the incapacity of Asian petrochemical producers to get cheap hydrocarbons and energy, increasing competitiveness, and development of new technology and feedstocks are some of the factors that have changed conditions in the industry.
Geopolitical factors also play a crucial role in determining the availability and sentiments in the upstream sector of the industry. Iraq, Libya, Iran, Syria and Sudan continue to be important centres, with rising concerns about China’s aggression in South East Asia.
The shale gas revolution has brought about dramatic changes, especially in the US industry. Investments plans are trying to take advantage of cheap shale gas and ethane there for manufacturing petrochemicals, which could add around 10 mtpa of additional ethylene capacity, with growing investment in polyethylene manufacture. Producers in Europe as well as in India are also planning to take advantage of the cheap feedstock and are establishing logistics in order to switch feedstock at some crackers and thereby strengthen their foothold in the global market.
Emerging markets like Asia hold a ton of opportunities. In India, demanding is gradually improving, and though growth is slowing down in China, urbanisation will continue to increase the demand for petrochemicals in both the countries.
In China, coal-based technologies are offering routes to olefins by means of methanol and MEG. And propylene projects based on propane dehydrogenation technology are being set up rapidly to increase the availability of propylene. However, these projects face economic, technological as well as environmental challenges and their adverse effects will become evident in a couple of years.
Iran is trying to boost its petrochemical capacity for methanol and ammonia and is planning to build methanol-to-olefin (MTO) projects based on Chinese/European technologies. Western sanctions have not affected the petrochemical industry as severely as it has the upstream oil and gas sectors.
In India, a few projects that have been getting delayed for a while are likely to be completed by 2015. However, the greatest impact will come from Reliance Industries’ 1.5 mtpa gas cracker that is scheduled to come online in 2016.
