New data for Oil & Gas Journal’s exclusive Worldwide Gas Processing report (beginning on p. 50) show, among other trends, that Middle East gas processing is solidly in third place among the world’s regions, behind the US and Canada.
Indeed, Middle East processing is the key reason 2006 gas processing outside the US and Canada continued for the second year running to capture more than 50% of world capacity.
A recent review of the region’s petroleum sectors for 2006 shows that liquids processing is also surging and for the same reason: confidence that higher oil prices are here to stay.
Expanding capacities
Earlier this year, Nancy Yamaguchi of FACTS Inc.’s Singapore office circulated a Middle East analysis for 2006. A new oil-price band of $50-60/bbl, she said, is pushing ahead exploration and development in the region to the tune of 3 million b/d of new crude and condensate production in 2005-10.
This production growth will push every refining country in the region-Saudi Arabia, Iran, Kuwait, Bahrain, Iraq, Oman, UAE, Qatar, and Yemen-to expand hydrocarbon processing capacity. Most have already taken advantage of healthy margins not only to expand charge capacities but also to improve product quality, she said.
By 2010, Saudi Arabia will still lead all countries with 10.2 million b/d of the region’s 25.6 million b/d production, up from 9.3 million b/d and 22.6 million b/d, respectively, in 2005.
Responding to its hot gasoline market, Iran leads the region in gasoline imports and plans to make its Bandar Abbas refinery a major center for condensate splitting, bringing on 360,000 b/d of splitting capacity by 2010 to be paired with catalytic reforming and isomerization to boost gasoline output.
Qatar, Yamaguchi reported, is also expanding condensate splitting capacity. This effort advances in tandem with its gas-to-liquids projects and in line with wider regional plans to ramp up naphtha exports to petrochemical manufacturers in Europe and the US.
Her analysis revealed that condensate runs for the entire gulf are likely to surpass 600,000 b/d this year and exceed 1 million b/d in 2010. Crude runs will reach about 5.3 million b/d in 2007 and rise to nearly 7 million by 2010.
Demand growth in the region will accelerate in 2006-10 to average more than 6.5%/year. By 2010, demand for oil products will reach 6.7 million b/d and in 2012 approach more than 7 million b/d. Of interest to gas processors is Yamaguchi’s partial explanation of what is behind this demand growth: “Among the main drivers of this rapid growth will be LPG and naphtha,” she said, for which double-digit growth from a small base is likely.
Growth rates for LPG, naphtha, and gasoline will lead regional demand patterns. And LPG and naphtha can come from natural gas processing as well as crude oil processing. Hence, the growth shown in OGJ’s numbers for 2006.
LPG exports in 2006-12, said Yamaguchi, will hold steady near 900,000 b/d; naphtha exports will grow to more than 1 million b/d by the end of the period.
While much has been made by other observers of the growth of naphtha exports, she believes the real export leader will be middle distillates. In 2007, such exports will be about 800,000 b/d but will grow to 1.4 million b/d by 2010 and to more than 2.1 million b/d by 2012.
Pushing this growth in large measure will be Qatar’s GTL projects. Its Oryx project (Qatar Petroleum Co. 51% and Sasol Ltd. 49%) produced its first volumes in January (OGJ Online, Jan. 31, 2007). The Pearl project is due on line in 2010-11; the ExxonMobil plant is due in 2011.
Mideast ascendancy
Accustomed to being a market setter in crude oil trade, countries of the Middle East are clearly expanding their presence and importance in other hydrocarbon movements. That fact may or may not comfort those concerned about supply balances in world markets. But the trend is inexorable.
As OGJ’s numbers continue to show and FACTS’s analysis supports, the world’s processing center has tilted toward the Middle East. The region, both as producer and as market, increasingly is acting as a fulcrum for trade patterns to the West as well as the East.