Boston, MA -- (SBWIRE) -- 07/18/2012 -- The Kuwait Petrochemicals Report examines the huge but as yet unrealised potential of downstream industries in the light of Kuwait Petrochemical Corporation's (KPC) plans to significantly boost ethylene and polyethylene capacities by 2016.
The report examines the lack of domestic conversion industries, which absorb around 1% of total petrochemicals output, and the failure of the country to add value and expand the product portfolio to improve petrochemicals margins.
In 2011, Kuwait had ethylene capacity of 1.7mn tonnes per annum (tpa) feeding downstream units that included 825,000tpa LLDPE, according to BMI estimates. It also has 370,000tpa of benzene, 822,000tpa of xylenes, 1mn tpa of EG, 765,000tpa of EO and 160,000tpa of PP capacity. In the fertiliser sector, Kuwait has capacities of 1.04mn tpa urea and 885,000tpa ammonia. Olefins and polyolefins capacities are unlikely to increase before 2016, with the main expansion projects completed in 2009. The Kuwaiti petrochemicals industry lacks a sufficiently broad product portfolio - notable by its failure to diversify into the purified terephthalic acid-polyethylene terephthalate chain despite sizeable xylenes feedstock availability - and this will mean the country will register a lacklustre performance compared to regional peers in 2012. By sourcing naphtha from domestic resources, the country still has an edge over most Asian producers and Kuwait remains competitive globally, despite failing to add value to production and move beyond its slim portfolio. On the downside, producing relatively low margin products limits the range of markets, primarily to the packaging markets in Asia.
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KPC is pressing ahead with more basic chemicals capacities and is developing the country's third olefins project, Olefins III. Scheduled for completion by end-2016, the unit will be based on a mixed-feed cracker with capacities of 1.4mn tpa ethylene and around 600,000tpa propylene, using gas and liquid feedstock. Downstream facilities will make products including PE and EG - potentially up to 800,000tpa PE and up to 600,000tpa EG. Olefins III will boost ethylene capacity by over 80% to 2.1mn tpa while PE will nearly double to 1.6mn tpa.
Over the last quarter BMI has revised the following forecasts/views:
- BMI has revised Kuwait's petrochemicals rating up by 0.2 points to 60.8 points this quarter, due to an improvement in structural and economic risk scores. It remains in third place, 0.6 points ahead of Qatar and 2.9 points behind the UAE.
- With refinery capacity set to increase, the declining naphtha-ethane differential and the improvement of long-term risks, Kuwait is ripe for investment in diversification, particularly in the PTA-PET chain which can be served by new xylenes capacity.
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