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Boston, MA -- (SBWIRE) -- 07/24/2012 -- This quarter's UAE petrochemicals report examines the continuing expansion of polyolefins and aromatics production centred on Abu Dhabi. We also look at how the sector will continue to respond to changes in the structure and pace of growth in the Chinese market.
BMI also analyses the competitive advantages of petrochemicals production in the UAE, which has joined other Gulf states in pressing ahead with highly integrated mega-projects, but warn that a lack of diversification (which could add value to output) will mean that the industry's margins are likely to remain sub-optimal. We also highlight that the UAE is attempting to overcome its reliance on commodity chemicals through the development of a plastics conversion industry.
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Polyolefin manufacturer Borouge expects the expansion of its complex in Ruwais, Abu Dhabi, to be fully on stream in mid-2014, following completion of construction by end-2013. The Borouge 3 expansion will add capacities of 1.5mn tonnes per annum (tpa) ethylene, feeding large polyethylene (PE) and polypropylene (PP) units. The planned Chemaweyaat complex, which Abu Dhabi hopes will be the world's largest petrochemical complex, will include an olefins plant, an aromatics complex and a range of downstream polymer and chemicals units. It is due to enter production in 2015, but BMI believes that 2016 is more realistic. The first part of the development, Tacaamol, will use heavy naphtha feed for its aromatics units and a lighter naphtha feed to supply a mixed-feed cracker producing 1.5mn tpa ethylene and 690,000tpa propylene. These will feed downstream plants producing polymers, xylenes and other derivatives.
Over the last quarter BMI has revised the following forecasts/views:
- By 2016, BMI expects ethylene capacity of 5mn tpa in the UAE, up from an estimated 2mn tpa in 2011, with PE more than tripling to 3.52mn tpa and PP rising by nearly 170% to 2.14mn tpa over the period.
- Key issues that will have an impact on the market include the effect of spreads between naphtha and ethane and the strength of the Chinese market. While ethane may be cheaper, the heavy use of naphtha in its feedstock mix will put the UAE in a better position than Qatar and Saudi Arabia as it attempts to diversify downstream production.
- In BMI's Middle Eastern petrochemicals risk/reward ratings (RRRs) matrix, the UAE registers a score of 63.7 points, unchanged since the previous quarter. This quarter, the UAE remains in second place, 2.9 points ahead of Kuwait and 13.9 points behind the regional leader Saudi Arabia. Whether the UAE retains its position will depend on its ability to stay ahead of Qatar in our country risk ratings, coupled with the further expansion of Borouge in 2013 and the proposed Chemaweyaat 1, which is set to bolster its petrochemicals capacity.
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