Steam cracker based petrochemical investments are capital intensive and on average take five to eight years from feasibility stage to start-up. The changing energy dynamics and evolving market conditions always challenge the chemical companies to build and operate these facilities in a competitive and cyclic business environment. The product demand side is closely tied into GDP growth and maturity of the local economy. Demand in mature economies relate closely to GDP while emerging and growing economies see much higher demand of petrochemical products as the middle class grows.
The success of chemical businesses depends on:
1. Access to (competitive) feedstock, market, and resources
2. World scale, integrated, efficient and reliable
3. Global footprint
4. Product range coverage and access to differentiated technologies
The regions such as North America will see petrochemical capacity built up due to feedstock and cheap energy advantage. This growth will be driven by export to growing regions of the world. Cheaper ethane in US only will not meet the demand growth in rest of the world. Therefore, emerging economies will invest in petrochemical facilities based on market access among other drivers. Most of these investments will depend on feedstock derived from crude oil or condensates sources. Smart integration, flexibility and lower capital costs will drive the competitiveness of these facilities. Countries like Saudi Arabia will look for optimizing the full hydrocarbon value chain to stay competitive and contribute to social and economic growth locally. Recent push by SABIC and Aramco to develop “Oil to Chemicals” is an example of this approach.
All these approaches can be successfully managed provided chemical companies plan for energy and market dynamics with deep understanding of technology and technology options that drive the competitiveness and are optimum for local conditions. Strategic thinking, industry insights and experience based knowledge is a must for managing the technical complexity and risk profile in a competitive and cyclical business environment. A holistic approach that takes into account business drivers, market dynamics, technology/engineering options and local conditions leads to a robust solution. Access to this knowledge and resources can help petrochemical businesses to develop, build and operate best-in-class facilities.
Sanjeev Kapur is Principal Consultant at Apex PetroConsultants. He focuses on consulting/advising olefins based petrochemical businesses.