Advantage of Low-Priced Feedstocks.

Larry Wheeler, CEO of Houston-based Larry Wheeler Consulting and ex-President of Shell Chemicals for the Middle East and South-East Asia, chaired the 6th session on Oct. 10. He reviewed the MENA petrochemicals export trade and the advantage of low-priced feedstocks enjoyed by MENA producers of petrochemicals.

The MENA will always have an advantage in the petrochemicals sector. Large MENA supplies of low cost feedstocks will continue. The petrochemical sector in this region will continue to grow.

The focus now is on six key feedstock-advantaged products. Urea exports are forecast to rise from 9 million tons/year in 2000 to 12 million t/y in 2005, with MENA having a 9% share of world urea capacity. Over the same period methanol exports will rise from 7 million t/y to 10 million t/y, polyethylene from 4.5 million t/y to 9 million t/y, ethylene glycol from 2.7 million t/y to 3.6 million t/y and polypropylene from 1.2m to 2.5m tons/year.

MTBE exports, currently 3.7 million t/y, are subject to uncertainty due to restrictions in the use of MTBE in motor gasoline in California and elsewhere.

Gilbert Jenkins, of Associated London Energy Consultants, reviewed the strategic planning of the major oil companies with particular reference for MENA based companies to become further involved in downstream markets. The large OECD based oil companies are currently making some drastic changes to their downstream activities. For example BP is intent on cutting its refinery capacity to 60-70% of its oil products needs. They are also forming marketing alliances to improve marketing profitability.

There could be good opportunities for MENA based companies to become further involved in the OECD consumer markets. It is suggested that the best way for them to do so is to form alliances with OECD-based oil companies and carefully consider which alliances would be most satisfactory in the long term (see his paper in Review No. 15).