Amid global economic challenges, the GCC’s petrochemicals sector is adding capacity and extending its portfolio towards specialist products for areas such as food packaging.
Despite Europe’s continuing economic woes and the Chinese slowdown, the Gulf’s chemical industry grew last year, expanding production by 4.5%. Meanwhile, just as significantly, GCC producers added capacity that can drive a shift away from commodities towards higher-value products.
The American Chemistry Council reports that worldwide chemicals production rose 2.8% last year. But the plastics industry outpaced this, with a 3.5% global expansion and an estimated 6% rise in the GCC.
In 2014, several GCC petrochemical projects were completed and brought on stream – mainly in Saudi Arabia but also in Oman and the UAE.
New capacity
A 55% plunge in oil prices since the middle of 2014 has hit petrochemical product prices and put off some planned projects. One of the largest of these impacts was the cancellation of two mega projects in Qatar: Sajeel and Karaana.
Sajeel was shelved because the partners involved are studying a new downstream petrochemical project that is expected to yield better economic returns. But Karaana’s high capital costs were considered to make it “commercially unfeasible, particularly in the current economic climate prevailing in the energy industry”.
Sabic and Shell also dropped a planned polyurethane (PU) project in Jubail, Saudi Arabia.
Yet the year still brought significant capacity additions.
Saudi Arabia:
Safco, an affiliate of Sabic, began pre-commissioning of Safco 5 Plant in Jubail. The plant is designed to produce 1.1m tons a year of urea and will consume 850,000m tons a year of carbon dioxide, making it the world’s largest carbon-capturing plants.
Sipchem affiliate International Polymers Company (IPC) commissioned a facility capable of producing 200,000 tons a year of LDPE and EVA.
UAE:
Borouge completed three projects in 2014, increasing the company’s polyolefin production by 2.5m tons up to 4.5m tons a year.
Oman:
Orpic has awarded several contracts in its Liwa plastics project, which revolves around a 1.4m-ton/year steam cracker that will enable Orpic to produce polypropylene and, for the first time, polyethylene.
Takamul New Ammonia Project:
Takamul Investment Company and Oman Oil Co. (OOC) announced plans to build
an ammonia plant in Salalah and appointed a FEED contractor for the project.
Takamul – PIA Project: Takamul is developing a purified isophthalic acid (PIA) project in Sohar, capable of producing 100,000 tons a year of PIA, which is an intermediate chemical used in the production of plastic resins.
Acetic Acid Project: BP signed a Memorandum of Understanding with the Ministry of Oil and Gas to build an acetic acid plant in Duqm.
New products
The region is also slowly moving into the next phase of product development: extending its portfolio away from commodities to also include specialty and intermediate chemicals.
In 2005–13, the GCC region’s chemical product tally almost doubled to 102, with total production capacity reaching 147m tons per year. Of the portfolio’s new products, 39% were downstream and 19% intermediate chemicals.
In Oman and Saudi Arabia, in particular, the GCC petrochemical industry took steps last year to diversify down the value chain to add value that is currently captured by export customers.
The GCC petrochemical industry continues to expand its research and innovation capabilities. Sabic started last year an USD11m expansion of its technology centre in Jubail Industrial city, scheduled for completion in 2017. In the UAE, Borouge began operating its state-of-the-art new innovation centre for plastics processing and analysis.
During 2014, the GCC petrochemical industry ventured into breakthrough technologies such as an ‘oil to chemicals’ pilot plant, designed to process 200,000 barrels of crude oil per day.
The industry also continued with efforts to develop the capabilities within local academic and research institutions with a series of co-operation MOUs:
• Sabic and the King Abdullah City for Atomic and Renewable Energy (KACARE) signed a research and development agreement;
• Saudi Aramco’s King Abdulaziz Center for World Culture and the King Fahd University for Petroleum and Minerals (KFUPM) set up a special high-tech laboratory;
• Sabic and Lockheed Martin signed a partnership to explore development of carbon nanostructure materials for a variety of end markets and applications;
• Qapco and Materia signed a MOU to study development of next-generation materials produced from Qatar’s existing feedstocks; and
• Qapco partnered with local and international universities on more than 12 innovative projects in the field of polymers and advanced materials.
The Gulf Petrochemicals and Chemicals Association (GPCA) predicts that the GCC’s plastics production capacity – estimated at 25.5m tons in 2014 – will increase 25% to 33.8m tonnes by 2020.
Meanwhile, plastics manufacturers are also gearing up to see a significant expansion in their product portfolio, which is set to go up from 13 today to nearly 30 in the coming years to cater to growing demand from sectors like aviation, transport and food packaging.