Global Oil & Gas Leaders Venture Further into Petrochemicals

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Editorial by Geoffrey Lakings for Industrial Info Resources (Sugar Land, Texas)--Recently, Saudi Aramco announced a deal to supply China with crude and petrochemical feedstocks, with China then supplying the Saudi state-owned giant with plastic raw materials:

• Reuters: Saudi's China refinery deal covers crude oil storage and petrochemical supplies - Saudi Aramco's new refinery deal to buy a 10% stake in private Chinese chemical group Rongsheng Petrochemical includes agreements on crude oil storage in eastern China, and the supply of plastics and petrochemicals to the Middle East energy giant.
  Alongside the 480,000-barrel-per-day crude supply deal announced March 27, Aramco also agreed to supply Rongsheng--one of China's largest makers of polyesters--with petrochemical feedstocks such as naphtha and paraxylene. Paraxylene is a raw material for synthetic fibres and plastic bottles.
  In return, Rongsheng Petrochemical will supply Aramco 800,000 tonnes a year of plastic raw materials polyethylene and polypropylene, and 300,000 tonnes a year of other chemical products, over the 20-year deal, the statement said.

And this is not the only deal happening in the Middle East--though this time the U.S. is involved, rather than China. Qatar and Chevron Corporation (NYSE:CVX) (San Ramon, California) are working out some particulars to develop--you guessed it--plastics, but with natural gas as a feedstock. Afterall, it is Qatar involved in this project:

• i24News: Qatar, Chevron to build $6 billion gas-to-plastics plant - Qatar signed a $6 billion deal with Chevron Phillips Chemical on Sunday to build a plant including the biggest ethane cracker in the Middle East, converting natural gas into polyethylene and other plastics.
  Ethane crackers, which convert gas into ethylene, have been targeted by environmental activists for their emissions. Yet ethylene and polyethylene are used in a swathe of plastic products, from piping to water bottles and food packaging.
  (And this) complex will have "lower waste and greenhouse gas emissions" than similar facilities around the world.

And it isn't just the leader of OPEC+ (Saudi Arabia), nor one of the world's largest gas exporters (Qatar). The United Arab Emirates (UAE) is involved in economic policy diversification to petrochemicals.

• IIR News: UAE Diversifies to Petrochemicals - The UAE is moving toward an economic policy diversification to reduce the country's economic dependence on oil and gas, and the petrochemical sector has taken on more significance, particularly with the launch of the UAE's Economic Vision 2030.
  Abu Dhabi National Oil Company (ADNOC) (Abu Dhabi, UAE) is the biggest and most important investor in the UAE, as it owns and operates a large number of petrochemical and refinery facilities in the country, through its various and multiple operators.
  Industrial Info is tracking more than $10 billion worth of active petrochemical projects in the UAE, such as ADNOC's grassroot chlor-alkali plant in Ruwais, construction of which could begin toward the end of this year.

Why is this "rush to petrochemicals" happening? Well, the UAE provided a clue through its launch of the UAE Economic Vision 2030, which aims to diversify away from being overly reliant on oil and natural gas economically, just like the UAE's neighbor has its Saudi Vision 2030. In a nutshell, there is clear "writing on the wall" that the global oil market will be greatly affected by the transition toward cleaner energy, with oil demand projected to peak by 2030:

• Pembina Institute: The future of oil in the energy transition: Understanding global oil demand scenarios - For the first time, a range of oil demand scenarios--including those created by industry, international organizations and research institutes--project that, if the current pace of climate policy action continues, global demand for oil will peak before 2030 and decline steadily afterward.
  These projections are largely based on the continued and accelerated uptake of electric vehicles, as well as environmental policies around plastic use and recycling, both of which lead to less oil being required for the transportation and petrochemical sectors (two key sources of current demand). Additionally, an increasing number of countries are committing to and developing net-zero targets, and economy-wide plans to reach those targets.
  Several scenarios indicate that the actions governments have already taken (or have committed to take in the short term), combined with macro-level economic trends, will likely result in a long-term decline in global demand for oil beginning before 2030.

Therefore, what's likely next for oil and natural gas--as mentioned above--is this transformational pivot to petrochemicals. Thankfully, Industrial Info's peerless research, available to clients, tracks and reports on what is transpiring in the Middle East, as well as significant petrochemical spending in China from China National Chemical Engineering Company Limited (CNCEC):

• IIR News: CNCEC at Work on $28 Billion in Chemical Projects Across China - CNCEC, a heavy-industry design and construction firm managed by China's Ministry of Heavy Industry, covers construction, engineering and design projects for the global Chemical Processing Industry. CNCEC was ranked 19th in Engineering News-Record's (ENR) 2021 Top 250 Global Contractors List.
  Industrial Info is tracking more than 140 active chemical processing projects, valued at more than US$28 billion, across China in which CNCEC is participating.

Industrial Info also has noticed smaller spending from China National Petroleum Corporation (CNPC)...

• IIR News: CNPC Changqing Petrochemical Company Spends Big in China - CNPC Changqing Petrochemical Company Limited (Xianyang, China), a vital, state-owned petroleum and petrochemical company in China, will spend US$89.49 million on 16 projects, such as unit upgrades and plant maintenance. Among the projects is a 55-day planned plantwide turnaround at its 100,000-barrel-per-day Xianyang (Changqing) Refinery in second-quarter 2023.

... as well as expansion activity in Thailand:

• IIR News: Thailand's AGC Vinythai Launches Expansion Projects - Chemical producer AGC Vinythai Public Company Limited (Rayong, Thailand) has begun expansion projects as part of its strategic plan to meet increasing market demand, as the polyvinyl chloride (PVC) and caustic soda markets are anticipated to grow by 4% yearly.
  The RCA-5 project will expand sodium hydroxide (caustic soda) production by 220,000 tons per year and chlorine gas by 193,200 tons per year. The Sakura project will enhance the capacity of vinyl monomer and PVC by 800 million pounds per year. Both expansion projects aim to commence operations by the first half of 2025.

Industrial Info also is tracking activity in Africa, where Sasol Limited (NYSE:SSL) (Sandton, South Africa)--which ranked 47th in global chemical sales in 2021--is investing significantly in capital and maintenance projects:

• IIR News: South Africa's SASOL Invests US$4 Billion in Capital, Maintenance - Sasol Limited, a major global chemical manufacturer, is investing about US$4.1 billion in more than 45 capital and maintenance projects, the bulk of which--more than US$4 billion--is attributed to its grassroot green-energy, or Power-to-X, projects.
  SASOL is investing about US$61.4 million in maintenance-related projects, with the remainder going toward storage and unit additions. The company's green-hydrogen and green-ammonia projects are set to be completed by the first quarter of 2025.

And yet more real-time information can be found in Industrial Info's Chemical Processing headlines:

• IIR News: Today's Chemical Processing Hotline Headlines
  North America
  ExxonMobil Chemical is in the process of restarting its 2,600 million-pound-per-year BOP ethylene unit in Baytown, Texas. The unit was shut down in mid-January for planned maintenance.
  
  International
  Amir Kabir Petrochemical Company has started a 30-day planned maintenance turnaround of the 1,146 million-pound-per-year ethylene unit at its Bandar Imam Petrochemical Complex in Iran. Expectations are to restart the unit by April 19.
  Maruzen Petrochemical Company Limited has started a 30-day planned maintenance turnaround of the 253.5 million-pound-per-year Ethylene Glycol (EG) and 253.5 million-pound-per-year Ethylene Oxide (EO) units at its Yokkaichi Chemicals Plant in Japan. Expectations are to restart the unit by April 17.

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Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).