The outlook for motor fuels is having a strong, increasing influence on petrochemicals capacity investments and promises to rattle the chemical industry status quo. Any company involved in steam cracking and businesses immediately downstream needs to develop scenarios and strategies taking into account the new reality. The world’s big refiners look at tomorrow’s world and see stagnant and probably regionally declining motor fuels demand. The shift in motor fuels demand means that the world’s big refiners are looking at their business differently, eyeing possibly above-GDP petrochemicals growth, replacing that lack of demand from the auto industry. The petrochemical business becomes, as a result, not just a (recently) profitable adjunct to the main thrust of what they do but the generator of product streams that command a great deal more attention. Refineries will, in the future, be run to produce more petrochemical feedstocks and more petrochemicals. An increasing proportion of the oil barrel will be used for petrochemicals – and plastics – manufacture. The problem for the oil refiner is that, currently, the proportion is low, but it is likely to take over as the main source of growth post 2030. Given that scenario, think about the pressure on the oil companies to make more, higher growth products, profitably. Think about the liquid feedstock streams – naphtha and liquefied petroleum gases (LPG) – that will be produced and needed for petrochemicals. Also think about the heavy products from the refinery, including even, perhaps, petroleum coke, that could be used to produce petrochemicals – in this instance, methanol. The influence of the non-integrated petrochemical producers is likely to diminish, with those companies facing a significant competitive disadvantage. Chemical companies will continue to push further downstream or into specialized niches. The world of petrochemicals will be dominated by big oil. Source: ICIS Chemical Business, 4/20/2018, p.10.

TCGR Note: It was also announced this week that KBR will do the FEED study for the Aramco-SABIC project. For more information on the technologies that will be used for the direct oil to chemicals conversion, see the following article.