Oil, gas and petrochemicals: Middle East

Pakistan

BMI has said that gas shortages continue to loom in Pakistan as the country waits on the development of required import infrastructure. BMI has also said that with struggling production, a limited potential for significant increases in gas production and a lack of import infrastructure, Pakistan will most likely continue to experience severe gas shortages over the near to mid term. It is possible that LNG could become part of the country’s energy mix as there are two fast tracked planned regasification projects in the pipeline. If constructed, Pakistan could see first LNG imports in 2015. BMI believe that this could help ease the risk of prolonged energy supply constraints when looking at the long term.

When it comes to shale in the country, BMI do not believe it will render the country as gas self sufficient over the next 10 years, however, the recent start up of shale gas exploration does create a large upside risk in future forecasts.

When it comes to oil demand in the country, BMI see oil demand increasing from approximately 480 800 bpd this year to 640 200 bpd in 2023. Also while BMI expect production to continue to increase throughout the next decade, this will leave the country with a growing import requirement.

Qatar

BMI has reported that the Qatari petrochemicals industry has so far focused on high volume production of basic chemicals. However, recent developments have shown that the country is seeking to add value to output with greater diversification in the downstream segment. BMI believes that the move towards a well integrated downstream value chain will increase the proportion of domestic use and consumption of locally produced petrochemicals. This, BMI expects, will provide some cushion to the impact of increasing competition from US and Asian producers who are increasing petrochemical production capacity.

By 2018, BMI forecasts that Qatari ethylene production will reach 7.4 million tpy, which is treble 2013 levels. This is expected to be accompanied by polyethylene capacity hitting 4.49 million tpy, and polypropylene reaching 540 000 tpy. It has also been said that over the next 10 years, Qatar is looking to spend US$ 25 billion on expanding the domestic petrochemical industry and double the annual capacity to 23 million tpy by 2020.

Saudi Arabia

BMI has reported that the Saudi petrochemicals industry is diversifying its feedstock mix and expanding its product slates to include more high value intermediates. BMI has said that this is essential as Saudi Arabia bans imports of natural gas and its pricing structure for domestic supplies has reduced the financial incentive to explore for it. Foreign companies have formed joint ventures with state oil firm Saudi Aramco to seek out gas deposits, but over the past 10 years they have largely failed to find commercially viable deposits. Authorities in Saudi Arabia now reportedly want to focus on the search for unconventional deposits that would require more complex and expensive technologies. However, this rise in gas extraction costs, is expected by BMI, to increase the cost of production and undermine the industry’s competitiveness against the new threat of shale based US production.

BMI do believe that Saudi Arabia will remain a robust market for petrochemicals goods, providing the basis for growth in downstream conversion sectors. In terms of the domestic market, the country is likely to remain relatively large and dynamic by Arabian Gulf standards.

United Arab Emirates

When it comes to petrochemicals in the UAE, BMI has said that the availability of naphtha will be boosted by refinery expansion at Ruwais, helping the Emirati industry’s competitive edge and enable it to produce a wider range of products. Also, BMI has said that the global packaging market, which is a major polymer consumer, will play an important role in the industry’s growth outlook. The effects of China’s economic stimulus, BMI says, is yet to be felt by UEA, and the cooling credit growth is likely to reveal hangover effects in the coming quarters.

By 2016, BMI expects ethylene capacity of 5 million tpy in the UAE, an increase of 2 million tpy from 2013 levels.

Adapted for web by Claira Lloyd

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