IEA: Petrochemicals to Become Biggest Demand Driver for Oil, Eventually

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Researched by Industrial Info Resources (Sugar Land, Texas)--Countries including the People's Republic of China and the United States will see the largest petrochemicals additions in the near term, while longer-term growth will be led by Asia and the Middle East, as petrochemicals slowly become the largest drivers of global oil demand, according to a new report by the International Energy Agency (IEA) (Paris, France).

Industrial Info is tracking more than $1 trillion in active Chemical Processing Industry projects worldwide, including more than $431 billion worth that are assessed as having a high probability of moving forward as planned.

Click on the image at right for a graph showing global Chemical Processing Industry project activity by world region.

Petrochemicals are set to account for more than a third of the growth in world oil demand to 2030, and nearly half the growth to 2050, adding nearly 7 million barrels of oil a day by then, overtaking demand by cars, airplanes and trucks, according to the IEA's The Future of Petrochemicals report. Petrochemicals also are poised to consume an additional 56 billion cubic meters (bcm) of natural gas by 2030, and 83 bcm by 2050.

Demand for plastics has outpaced all other bulk materials - such as steel, aluminum or cement - nearly doubling since 2000, according to the IEA report. Advanced economies currently use up to 20 times more plastic and up to 10 times more fertilizer than developing economies on a per capita basis, underscoring the potential for global growth, the report goes on to say.

In the near term, the U.S. is expected to increase its global market share for ethylene to 22% by 2025, up from 20% in 2017. "Along with the Middle East, the United States has a feedstock advantage in its access to low-cost ethane owing to its abundant natural gas supplies," according to the report. "This advantage allows both regions to gain the lion's share of ethane-based chemical exports in the short- and medium-term."

Meanwhile, coal-based methanol-to-olefins capacity in China is expected to nearly double from 2017 to 2025. In the long term, Asia and the Middle East are forecast to increase their global market share of high-value chemical production by 10 percentage points, while the market share coming from the U.S. and Europe decreases. By 2050, according to the report, India, Southeast Asia and the Middle East combined will account for about 30% of global ammonia production.

Under a "Clean Technology Scenario" outlined in the IEA report, air pollutants from primary chemical production could decline by nearly 90% by 2050, while water demand would be nearly 30% lower than a base scenario.

One of the larger chemical projects in terms of total investment value being tracked by Industrial Info is Petroliam Nasional Berhad's (Petronas) (Kuala Lumpur, Malaysia) $5 billion steam cracker complex in Pengerang, Malaysia. Part of a $27 billion integrated refining/petrochemical complex, the new steam cracker complex will produce an estimated 1.1 million metric tons per year of ethylene. Construction began in first-quarter 2016, with completion expected in third-quarter 2019. CB&I (now merged with McDermott International Incorporated (NYSE:MDR) (Houston, Texas)), with TechnipFMC plc (NYSE:FTD) (London, England) and Fluor Corporation (NYSE:FLR) (Irving, Texas), is providing program management consultant and front end engineering design (FEED) services. For more information, see Industrial Info's project report.

In the U.S., one of the larger petrochemical projects underway is a 1.5 million metric-ton-per-year ethylene unit addition at Sasol Limited's (NYSE:SSL) (Johannesburg, South Africa) $11 billion Lake Charles Chemicals Project (LCCP) in Westlake, Louisiana. WorleyParsons (North Sydney, Australia), TechnipFMC and Fluor are working on the ethylene unit addition, which is expected to reach completion by the end of this year. For more information, see Industrial Info's project report and July 24, 2018, article - Commissioning Underway for Sasol's Chemical Project in Louisiana.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.