MIDDLE Eastern producers are at a stage in their development where pure ethane plays are difficult to secure and the industry is moving toward heavier feedstocks, however with the development of new shale gas resources in the US, the region needs to prepare to capitalize on potential opportunities in its own petrochemical sector.

Eli Andjelich, Vice President, Business Development, Middle East from Chevron Phillips Chemical Company LLC, recently participated in an interview with The World Refining Association ahead of PETCHEM Arabia 2012 to explain the changing global scenario of petrochemical production from the Middle East to the West.

PETCHEM Arabia, running from Sept. 30 to Oct. 3
in Manama, will address these challenges and explore future directions for the region’s industry.

Andjelich reported that announcements have been made over the past year regarding the high probability that several (four to six) new crackers will be constructed in the US based on feed supply from the growth of shale gas production. If these announcements are built, the US would become a larger exporter of ethylene and ethylene derivatives.

The real challenge for the petrochemical industry in the Middle East will likely be the availability of advantageously priced ethane. From a country perspective, said Christian Günther, Partner at McKinsey and Company. He believes that the right feedstock allocation decisions by regional governments as well as enhanced education and capability building are required. At the same time, chemical companies will have to accelerate their move towards functional excellence in operations, capex, procurement and marketing and explore opportunities beyond their traditional products to ensure the Middle East remains globally competitive.

With the development of new shale gas resources, the US petrochemical industry is announcing significant expansions of US petrochemical capacity and these new resources are a major driver for Chevron Phillips Chemical’s new investments in the US. The company is on track to build a 1.5 million metric tons/year ethane cracker at its Baytown, Texas plant and two polyethylene facilities, capable of producing 500,000 metric tons/year each, in Old Ocean, Texas near its Sweeny plant. – SG