Qatar notched an important milestone in the global petrochemicals market on Monday, when H E Saad bin Sherida Al Kaabi, Minister of State for Energy Affairs and President and CEO of Qatar Petroleum (QP) announced QP’ decision to develop a new Petrochemicals Complex in Ras Laffan Industrial City.
The Complex will have an ethane cracker with a capacity of 1.9 million tonnes of ethylene per annum. It will also include two high-density polyethylene derivative units, which will rise Qatar’s current Polyethylene production capacity by 82 percent by 2025. The global ethane market is estimated to grow at a CAGR of 6.14 percent. In the global ethane market, Asia-Pacific held the largest market share in 2018 and is expected to grow at a fastest rate. North America accounted for the second largest market share. The Middle East & Africa market and Latin America markets are expected to show increasing growth going forward.
Growing polyethylene demand across various industrial verticals is largely driving the global ethane market. Increasing use of ethanol as a biofuel is also contributing significantly to the growth of the product market. With the new project coming on line, Qatar will be grabbing a significant share from the global market.
Industry commentators love to claim the consumption rate of petrochemicals products in Middle East is much smaller. For example, market analysts at Mc Kinsey & Company, point out that in 2014 polymers consumption was 10 million tonnes in the Middle East, compared to 35 million in the US and 118 million in China. As a result, the majority of chemicals produced in the Middle East needs to be exported.
In addition, many export destinations are already becoming more self-sufficient, making competition with local producers much tougher. From 2020, China is expected to produce 90 percent of its petrochemical products self-sufficiently (up from 65 percent today). Another concern shared by market analysts is that in the Middle East, operational costs for a cracker are 35-40 percent higher than in China and 5-10 percent higher than in the USA, mostly due to higher personnel and other fixed costs. The Middle East region has also had lower equipment efficiency due to shutdowns, underutilisation and some lost debottlenecking opportunities.
To cope with these challenges and maintain the growth pace going forward, Middle East petrochemical players should focus on several development areas. Specifically, they should achieve functional excellence; increase synergies with refinery; and make strategic decisions around entering the downstream sector. We are confident that QP’s visionary leadership is well capable of addressing these market challenges.
H E Al Kaabi’s another major Monday announcement, that Barzan Project will be operational by this year-end, is a shot in the arm for Qatar’s domestic energy sector. The much-awaited project will provide natural gas to complement the current and future infrastructural developments, such as power plants, desalination plants, as the country prepares itself to host the FIFA World Cup in 2022.
