Special Report: Global ethylene productionrises 7 million tpy in 2008

July 27, 2009
Worldwide ethylene producers added more than 7 million tonnes/year of capacity in 2008, according to Oil & Gas Journal's latest ethylene survey.

Worldwide ethylene producers added more than 7 million tonnes/year of capacity in 2008, according to Oil & Gas Journal’s latest ethylene survey. Primarily due to new plants starting up in the Middle East, the growth in capacity represents record additions. It is a significant increase compared with capacity growth of 2 million tpy in 2007 and only 245,000 tpy in 2006.

Global ethylene production capacity as of Jan. 1, 2009, was 126.7 million tpy, an increase from 119.6 million tpy of capacity reported in last year’s survey (OGJ, July 28, 2008, p. 46). The additional capacity represents an increase of nearly 6%.

The latest survey lists five new world-scale ethylene production plants with combined capacity of nearly 6 million tpy, and new trains in two existing plants. None of the ethylene producers surveyed reported any shutdown plants.

Fig. 1 shows the cyclical nature of the ethylene industry. In 2008, capacity additions were the highest in the past 20 years, after recording the lowest addition rate in at least 20 years in 2006.

In 2009, more than 10 million tpy of capacity is slated to start up, although the global recession and an oversupplied are likely to make that number far lower. In last year’s report, ethylene producers were reporting that they would add more than 17 million tpy of capacity; the actual number was 10 million tpy lower.

New units

Six new ethylene plants appear in this year’s survey, all in Iran and Saudi Arabia. In addition, another plant has started up a new train in an existing plant in Kuwait.

After numerous delays, Iran’s National Petrochemical Co. (NPC) started up three of its world-scale ethylene production plants in 2008. The Arya Sasol Polymer Co., a joint venture of NPC and Sasol, started up a 1 million tpy ethylene plant in early 2008.

The Arya Sasol ethane cracker in Assaluyeh produced its first on-spec product in November 2007 and ramped up production in early 2008. The ethylene will feed the joint venture’s two new polymers plants.

Also in Assaluyeh, Jam Petrochemical Co. achieved on-spec products in a 1.32 million tpy ethylene plant in February 2008. The Jam Petrochemical complex is the largest ethylene producer in Iran. The plant also produces 305,000 tpy of propylene, 216,000 tpy of pyrolysis gasoline, and other products.

After several delays in construction, the NPC subsidiary’s plant started operations in December 2007 and was officially inaugurated in June 2008.

Iran’s Marun Petrochemical Co. inaugurated its 1.1 million tpy ethylene plant in August 2007 and achieved production in early 2008. Ethylene from Marun’s cracker at Bandar Imam feeds a 300,000 tpy high-density polyethylene plant and a 400,000 tpy monoethylene glycol plant.

In Al-Jubail, Saudi Arabia, an ethylene production plant owned by the Tasnee Petrochemical Co. was completed in September 2008 (OGJ, Mar. 23, 2009, p. 44). The company is a joint venture of Tasnee, LyondellBasell, Saudi International Petrochemical Co. (Sipchem), and Sahara Petrochemical Co.

The Tasnee plant can produce 1 million tpy of ethylene, 285,000 tpy of propylene, and 800,000 tpy of polyethylene.

The Yanbu National Petrochemical Co. (Yansab), a subsidiary of Saudi Basic Industries Corp. (SABIC), completed a world-scale petrochemical complex in October 2008. The complex is capable of producing 1.3 million tpy.

Additionally, Chevron Phillips Chemical Co. reported to OGJ that it had started up a petrochemical plant that can produce 300,000 tpy of ethylene.

In late 2006, China National Petroleum Corp.’s Lanzhou Petrochemical Co. Ltd. started up a 360,000-tpy ethylene unit in its Lanzhou plant. The total capacity of the facility is now 600,000 tpy.

The ethylene plant is integrated with CNPC’s 250,000-b/d refinery. The ethylene expansion was part of an integrated project and other units in the project included 300,000 tpy of polypropylene, 650,000 tpy of polyethylene, and 200,000 tpy of gasoline hydrogenation.

Largest producers

Table 1 shows rankings of the 10 largest ethylene production complexes in the world. Nova Chemical Corp.’s 2.8-million-tpy Joffre plant retains the top spot on the list.

Equate Petrochemical Co. is a new listing in Table 1. The plant more than doubled its capacity to 1.65 million tpy when it started up a new train (Olefins II) at its Shuaiba, Kuwait, plant.

It is now the tenth largest ethylene production complex in the world. Dow Chemical Co.’s 1.64-million-tpy Freeport, Tex., plant fell off the list.

Equate announced on Dec. 1, 2008, that it was producing 850,000 tpy from its Olefins II ethylene plant. The train launched commercial operations on Nov. 20, 2008.

Equate is a joint venture of Kuwait’s Petrochemical Industries Co. (42.5%), Dow (42.5%), Boubyan Petrochemicals Co. (9%), and Qurain Petrochemical Industries Co. (6%).

ChevronPhillips Chemical Co. slightly lowered the stated capacity of its Sweeny, Tex., plant. This year’s survey listed the plant at 1.844 million tpy of capacity, down from 1.868 million tpy last year.

Regional review

Table 2 ranks ethylene production capacity by region.

The biggest gainer by a large margin was the Middle East, which added almost 7 million tpy of capacity. The region increased capacity more than 56% due to six new plants and one new train previously mentioned.

Asia-Pacific and Eastern Europe also added capacity in 2008. Asia-Pacific added 360,000 tpy, all in CNPC’s Langzhou expansion.

Eastern Europe showed an increase of 59,000 tpy compared with last year’s survey. Unipetrol, which changed its name from Chemopetrol AS, reported to OGJ that the capacity in its Litvinov, Czech Republic, ethylene plant increased to 544,000 tpy from 485,000 tpy as listed in last year’s survey.

North America and Western Europe showed slight decreases of 300,700 tpy and 10,000 tpy, respectively. South America did not experience any changes in capacity.

In the US, ChevronPhillips reported slight decreases in units at its Sweeny, Tex., ethylene complex. The decreases were offset by increased capacity in its Cedar Bayou and Port Arthur, Tex., plants. ChevronPhillips reported that its Cedar Bayou increased capacity to 835,000 tpy, up from 794,000 tpy, and Port Arthur raised capacity to 828,000 tpy, also up from 794,000 tpy.

Table 3 ranks ethylene production capacity by country. Iran showed the largest increase, followed by Saudi Arabia, Kuwait, China, and the Czech Republic, for the reasons previously mentioned.

Lower capacity

Table 3 also shows that only two countries showed a net decrease in capacity: the Netherlands and the US. The total decrease in these two countries was 310,700 tpy.

No plant announced a complete shutdown; therefore, the capacity decreases were due to partial shutdowns or companies restating ethylene capacity.

In the US, net increases in ChevronPhillips’s plants were offset with falling capacity in two of Shell Chemicals’ plants. Shell reported that capacity in its Deer Park, Tex., complex fell to 1.179 million tpy from 1.426 million tpy, and Norco, La., decreased to 1.451 million tpy from 1.556 million tpy. This is a combined drop of more than 350,000 tpy.

In the Netherlands, SABIC slightly lowered the stated capacity in its Geleen ethylene plant.

Largest producers

Table 4 lists the top 10 owners of ethylene capacity worldwide. There were two changes in the company order.

Iran’s NPC is a newcomer to the list, coming in at the seventh largest ethylene producer in the world. NPC increased the capacity in its plants to 4.2 million tpy from 1.2 million tpy stated in last year’s survey. This is an increase of nearly 250%. Total AS dropped off the list due to this change.

Starting up a new ethylene plant in Saudi Arabia allowed SABIC to move up to the second largest ethylene producer in the world, passing ExxonMobil Corp, whose capacity stayed the same as 2007. SABIC’s capacity increased to 8.4 million tpy from nearly 7.2 million tpy, an 18% rise in plants in which it fully or partially owns.

Half of the 10 largest ethylene producers experienced increases in capacity of wholly owned or partially owned plants: Dow, SABIC, LyondellBasell, NPC, and ChevronPhillips. Only one producer, Shell, had a decrease in capacity.

Construction

Table 5 lists ethylene production capacity slated to start up during 2009-13.

Last year, OGJ forecast that an unprecedented 17.4 million tpy of new capacity would come on line in 2008, based on responses to construction surveys. The 7 million tpy of capacity that started up in 2008 did not include two plants in China, one plant in Qatar, and two plants in Saudi Arabia that were listed in Table 5 last year.

According to the latest OGJ construction data, almost 11 million tpy of new capacity is slated to come on stream in 2009 (Table 5). How much will actually start up depends on the global economic situation and demand growth.

All of the new capacity is in the Middle East and Asia-Pacific. Six of the projects list capacities of more than 1 million tpy each.

There are currently several new world-scale ethylene plants under construction in Saudi Arabia, Iran, Qatar, and the UAE.

Fig. 2 shows that Middle East ethylene production capacity is expected to increase to about 28 million tpy in 2012 (OGJ, Mar. 23, 2009, p. 44).

These expansions will more than double the region’s capacity from a 2007 level of 12.3 million tpy. In 2009 alone, the region is slated to add nearly 7 million tpy of capacity.

Saudi Arabia, in 2009, will start up two major ethylene production complexes. The first phase of the PetroRabigh complex, a joint venture of Saudi Aramco and Sumitomo Chemical, was scheduled to start commercial production in second-quarter 2009.

The plant will produce 1.3 million tpy of ethylene and 900,000 tpy of propylene. Feedstock to the plant is about 95 MMscfd of ethane and 15,000 b/d of LPG.

In early 2009, SABIC’s Eastern Petrochemical Co. (Sharq III) was scheduled to start up a 1.3 million tpy ethylene plant in Al-Jubail.

Future plans for Saudi Arabia include the Saudi Kayan mega complex with a production capacity of 4 million tpy, and a Dow Chemical-Saudi Aramco joint venture to build a 1.2-million-tpy ethylene plant.

By 2012, Iran’s ethylene production capacity will increase to 8.4 million tpy from the current 4.7 million tpy.

Qatar Petrochemical Co. (QAPCO) is scheduled to start up a 1.3 million tpy ethylene plant in Ras Laffan in second-half 2009. Other companies with an ownership share in the plant include Total Petrochemicals, Qatar Petroleum Co., and Chevron Phillips Chemical Co.

Qatar Petroleum also has two joint ventures, one with ExxonMobil and the other with Shell. Both projects are for crackers with capacities of more than 1 million tpy; however, neither is expected to start up before 2013.

In second-half 2009, Fujian Petrochemical Co. Ltd. is scheduled to start up 800,000 tpy of ethylene production. Fujian Petrochemical is a consortium of Sinopec, which owns 50%, ExxonMobil (25%), and Saudi Aramco (25%). The integrated complex will also reportedly produce 1.2 million tpy of polymers, 300,000 tpy of benzene, and 700,000 tpy of paraxylene.

PetroChina’s Dushanzi Petrochemical Co. is slated to start up a 1 million tpy ethylene production complex near yearend 2009. The complex will also be capable of producing 1.5 million tpy of polymers and 240,000 tpy of benzene.

Global markets

Ethylene markets are experiencing weakening supply-demand conditions, reversing a trend that started in late 2004. Record levels of excess capacity and a global recession are placing downward pressure on ethylene prices and operating rates.

According to Chemical Market Associates Inc. (CMAI), Houston, excess capacity will reach as high as 17 million tpy in 2010, or about 15% of total demand. This compares to 7% surpluses in 2002 and in 1993 (Fig. 3).

CMAI predicted at its 2009 World Petrochemical Conference, Mar. 25-26, Houston, that global nameplate ethylene capacity will increase to about 145 million tpy by 2010 from 125 million tpy in 2007. Total global demand for ethylene will remain essentially flat at about 115 million tpy.

“The absolute level of surplus capacity in the forecast is moderated by the assumption that the level of closures during this period will reach nearly 9 million tpy,” according to CMAI.

Similar to previous downturns in the ethylene industry, lower profitability leads to shutdowns of some older, high-cost plants.

Closures amounting to about 2.5 million tpy have already been announced in North America and Western Europe, according to CMAI. Its forecast suggests an additional 6.5 million tpy will have to be shut down (Fig. 4), spread among North America (4 million tpy), Asia (3 million tpy), and Europe (2 million tpy).

CMAI’s energy market forecast favors light-feed cracking vs. heavy-feed cracking. Therefore, its closure assumptions focus on assets that heavily depend on naphtha feedstocks and may not be integrated with refinery operations.