Warren R. True
Chief Technology Editor-LNG/Gas Processing
DALLAS, Mar. 7 -- High gas commodity prices in North America have accelerated a shift in investment strategy by the region's ethylene producers.
Investment in new or expansion capacity in North America has moved to the Middle East, said Mark Eramo, vice-president for Chemical Market Associates Inc., Houston. He was speaking Mar. 6 to an industry executive forum at the 85th Gas Processors Association Convention in Dallas that addressed high energy prices and their effect on the gas processing industry.
The Middle East has become the low-cost supplier of ethylene and propylene to Asia. That region's market has, in turn, increasingly become North America, especially the US.
This "global assembly line," as Eramo characterized it, has become based on the fixed low costs of feedstock in the Middle East and on the world's largest market for durable and nondurables—North America.
This transition has been taking place since about 1995, when the US was the world's largest exporter of ethylene to the world. By 2004, the US was a net importer of ethylene-derived products. The Middle East had become the world's largest exporter.
Consequently, said Eramo, there will be no expansions or new ethylene production capacity in North America for the foreseeable future.
Contact Warren R. True at [email protected].
