Saudi Basic Industries Corporation is looking to develop crackers that can use a range of feedstocks to produce olefins on increasing difficulty in getting allocations for its gas-based crackers, senior company officials said on Wednesday on the sidelines of an industry conference.
"We are doing extensive research on replacing gas-based crackers with ones that use a mix of syngas, LPG and other hydrocarbons," an official said during the Middle East Technology Forum 2011 in Dubai. He did not comment on whether a specific technology had been developed, but said that a team of scientists was working on the project.
"A few years ago no one would have imagined that we would face a shortage of gas. But today, we are facing a shortage. And therefore, we need new technology to replace gas as a feedstock," said Abdul Rahman Al Ubaid, executive vice president, technology and innovation at Sabic.
No new gas allocations to the petrochemical producers have been made in Saudi Arabia since 2006, according to industry sources. The country is facing increasing gas shortage as it tries to balance the energy needs of a growing population and a mammoth petrochemical industry.
Saudi Arabia is adding an estimated 5.5 million mt/year of ethylene capacity in the next four years. In 2015, Sabic is expected to be the world's largest petrochemicals producer in tonnage terms, according to the Gulf Petrochemicals and Chemicals Association.
At the fifth annual forum of the GPCA held in Dubai in December 2010, Sabic Chairman Mohamed Al Mady said that more Saudi Arabian olefin producers were looking to move to other feedstocks from gas.
Another official source involved in developing gas fields in Saudi Arabia said that since most of the gas is associated with oil, it has been difficult to increase production in the wake of OPEC's targets for oil output.
"OPEC has slashed Saudi Arabia's oil production quota to 8.051 million b/d. According to industry sources the country needs to be operating at 10 million b/d to provide enough ethane for crackers to run at 100% capacity," he said.
Industry sources say that Saudi Arabian companies like Sabic are able to produce ethylene at a cost of about $300/mt from gas-based crackers giving them a competitive edge over Northeast Asian producers whose steam crackers are mostly naphtha based.
"Sabic will incur higher cost on feedstock if it shifts to other sources to run its crackers," a Dubai-based trader said.
