2010-03-09 16:07:04 -
Saudi Arabia Petrochemicals Report Q2 2010 - a new market research report on companiesandmarkets.com
www.companiesandmarkets.com/Summary-Market-Report/saudi-arabia-p ..
Although Saudi Arabias petrochemicals industry is expected to make a strong recovery in 2010 on the back of Chinese demand, this latest Saudi Arabia Petrochemicals Report warns of severe project delays. These delays will be of at least two years, and will undermine the governments target of raising total petrochemicals capacity from 60mn tpa in 2009 to 80mn tpa by 2015.
In the short-term, the Saudi Arabian petrochemicals industry is set for a strong recovery in 2010, following an upturn in H209. Performance will vary, with fertilisers expected to revive earlier and at a stronger pace , and engineering plastics representing the weakest market. There are fears that the Chinese governments stimulus plan for petrochemicals, which is set to involve
investment in new refineries to speed up their construction, could create a problem of short-term over-supply in Saudi Arabias export markets in Asia. Much will depend on the strength of recovery in the automotive and home appliance sectors, which are expected to recover before the building sector does. The medium- to long-term growth of the Saudi Arabian petrochemicals industry will be highly dependent on Asian markets, notably China.
By 2014, China could represent 35% of the global PP market and 20% of global PE demand. This will directly benefit Saudi Arabias expanding petrochemicals industry, both domestically and in its investments in China.
Our forecasts for the Saudi Arabian petrochemical sector take into account long delays in project completion. Saudi Aramcos venture into the petrochemicals sector could lead to cuts in the availability of ethane to its rivals. Other sources of feedstock will have to be used, pushing up plant costs and threatening to make some projects unviable. We do not believe the proposed Ras Tanura complex, with a 1.5mn tpa ethylene cracker, will come onstream before 2015. Petro Rabigh is a particular cause of concern, as its costs have risen from the initial outlay of US$4.3bn to over US$10bn. The commissioning of the Petro Rabigh complex began in Q209, having been delayed from Q408.
Other delays are causing problems for Saudi Arabias capacity targts. In January 2010, the Saudi Arabian oil ministry indicated that Saudi Aramco would be commissioned to construct the Jizan oil refinery, which could include an 800,000tpa PP plant using propylene from the refinery and, in a second stage, an olefins complex. The bidding process for the Jizan refinery project has been delayed several times due to a lack of interest. The project is currently running at least two years behind schedule as the government has struggled, and failed, to attract foreign investor interest. The Saudi Kayan project, which forms a major part of Saudi Arabias petrochemicals push, is also facing severe delays. This is because the company has cancelled engineering, procurement and construction (EPC) contracts for amines and LDPE plants and reopened them for bidding. Consequently, Saudi Kayan is being delayed, with us expecting it to be completed in H212, as opposed to 2010, as was originally intended. Kayan has cancelled two plants that formed part of its original plans for the complex. They are a 50,000 tonnes per annum (tpa) dimethyl formamide plant and a 20,000tpa choline chloride unit.
In 2009 Saudi Arabia had olefins capacities of 12.93mn tpa ethylene and 4.5mn tpa propylene.
Polyolefins capacities included 2.51mn tpa HDPE, 220,000tpa LDPE, 3.3mn tpa LLDPE, 4.14mn tpa PP, 175,000tpa PS and 405,000tpa PVC. By 2014 we forecast ethylene and propylene capacities will rise to 18.43mn tpa and 5.52mn tpa propylene. Total PE capacity will rise 16% to 8.32mn tpa, PP will rise 11% to 5.52mn tpa, and PS capacity will remain unchanged.
