8.25 PM Monday, 15 April 2024
  • City Fajr Shuruq Duhr Asr Magrib Isha
  • Dubai 04:37 05:53 12:22 15:49 18:45 20:01
15 April 2024

Ethylene export can help GCC oil producers to raise currency revenue

Ethylene is a chemical compound used in making polythene and other polymers. (AFP)

By Shashank Shekhar
Ethylene export, which is tied to Opec production quotas for oil, is helping GCC oil producers like Saudi Arabia to “increase hard currency revenue”, a study has said.

A report on chemicals production by HSBC global research, a division of HSBC global banking and markets, said the region will add three million tonnes of ethylene production capacity in 2009, with Saudi Arabia and the UAE leading the way.

Supported by cheap energy supplies, the Middle East producers will continue to add capacity until 2013 when their total production capacity will stand at 30 million tonnes – double the current production capacity – data published by HSBC showed.

Ethylene is a chemical compound used in making polythene and other polymers. The carbon compound is also used in the agriculture sector. Though it has been Saudi Arabia that has always led the way as far as ethylene production is concerned, other GCC countries like the UAE, Qatar and Kuwait are fast joining in, it said. 

The report follows an announcement by the UAE that it will establish the world’s largest petrochemical complex in Abu Dhabi by 2013.

The plant will be run by the recently established Abu Dhabi National Chemicals Company. “We expect Asia and the Middle East to account for almost 100 per cent of the global ethylene capacity additions between 2008 and 2013. The chart that follows looks at regional ethylene capacity additions in Asia and Middle East from 2008 to 2013, showing that the bulk of capacity additions are expected in the Middle East – in particular, in the GCC countries,” Hassan Ahmed, the author of the report said.

“These countries account for 87 per cent of capacity additions through to 2013,” the report commented on the projects under execution in Asia and the GCC.

“Projects in most GCC countries – Saudi Arabia, Kuwait and Qatar – have a very good execution record,” Hassan wrote in the report affirming that the projects are expected to go ahead even during the ongoing global financial crisis.

Cheap gas supply is supporting the GCC countries in achieving their petrochemical dreams, HSBC said.

“Middle East producers buy ethane at an average equivalent natural gas value of $1.00 per million British Thermal Units  ($1 per mmBtu). The original facilities in Saudi Arabia pay $0.75 per mmBtu,” Hassan said on the prevailing  low prices of feedstocks. “We would expect the low-cost Middle Eastern producers like Sabic to continue generating healthy margins albeit with a declining trend.”

Citing the global ethylene demand growth history since 1966, the report said that a rebound in ethylene demand may emerge sooner than expected.