The fourth meeting of Petchem Arabia, organised by the World Refining Association, attracted major international players who flocked to Abu Dhabi’s Beach Rotana Hotel to discuss the major challenges facing the industry.
More than 200 delegates representing major regional producers from Saudi Arabia such as Aramco, Sipchem, Tasnee, the UAE’s Borouge and Chemaweyaat, as well as Kuwait’s Equate and Qatar’s Qapco, flew to Abu Dhabi to thrash out the burning issues for regional producers.
Speakers from Total, Chemaweyaat, Fluor and Honeywell discussed how to overcome the organisational, technical and logistical challenges which integrated petrochemical projects present.
In the opening session, Daniel Lacombe, Jubail refinery project director, at Saudi Aramco Total refining and Petrochemical Company (SATORP), revealed project costs fell at a crucial time for the $10b development of an integrated full-conversion refinery at Jubail.
“In 2008 we were on the verge of not doing SATORP, as was Aramco – costs were crazy. The cost drop was a tremendous help, so in a way, the crisis was lucky for us,” said Lacombe. Jubail’s focus will be on exporting jet fuel and diesel to Asia and Europe. “We will produce 100 000 t/y of LPG for export to Asia, and gasoline for the domestic market, accounting for 55% of the crude input, whereas most refineries produce only 40%,” he added. The project cost, however, may rise if the global economy and oil prices pick up, according to Lacombe. “I’m not sure if the same window will stay open for long,” he observed.
Dr Philip Leighton, senior director, at Abu Dhabi National Chemicals Company (Chemaweyaat), tackled the case for shifting to from gas to liquid feedstock and how it would affect business, as Chemaweyaat plans to crack naphtha as feedstock instead of ethane.
“All associated gas NGLs go to the Ruwais fractionation trains where the current capacity is 14m t/y, but will be increased to 21m t/y when the new train is operational in 2014,” revealed Dr Leighton. “Currently all associated gas goes to market, but now, an allocation of Abu Dhabi’s gas will supply Chemaweyaat with feedstock, which along with naphtha will allow us to make more complex chemicals than the Gulf’s ethane-based plants,” he explained.
Mohamed Al-Azdi, CEO of Chemaweyaat, revealed that FEED contracts for Tacaamol will be awarded early 2010. Al-Azdi also said the Tacaamol project faced tough economic challenges. “Feedstock for the Tacaamol project will be liquid feedstock,” he said.
The availability of feedstock and financing dominated the presentations. Ethane feedstock allocations to petrochemical companies in Saudi Arabia stopped in 2007, said a Saudi delegate. “Sipchem was the last company to receive ethane gas allocations,” said Mehdi Adib, vice president of Sipchem. The gas allocation that Sipchem received was used to develop an acetyl project.“We will start up the acetyls project early in November,” revealed Adib.
Dr Serge Verma, president of Houston based Vinmar Projects, said: “The reduction of oil production is expected to reduce the availability of the ethane feedstock, as the majority of the gas extracted is associated, which is the case of Saudi Arabia.”
Jonathan Robinson, HSBC managing director, head of project financing of MENA region, resources and energy group warned that whilst project financing is available, the conditions have changed. “The problem now is with the cost of these loans, not with the availability of these loans.”
Despite the gloomy fiscal situation, bankers at Petchem Arabia remained optimistic about the future availability of funds, though not from traditional banks. “Things will improve in the next two or three years,” says Zahoor Khan, senior manager at Gulf Investment Corporation. “GCC sovereign wealth funds have sufficient capital to continue the investments,” explained Khan.
The event was an opportunity to gather regional producers and clients from key markets in Asia and Europe in one place. “It was an excellent opportunity to meet with our competitors and with our clients,” said Farrukh Iqbal Qureshi, manager at Pakistani Engro Polymer and Chemicals. “Our participation in the event allowed us to draw lessons from the experiences of companies on how the private sector could survive the downturn,” he concluded.