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Egyptian petrochemicals

Hydrocarbon Engineering,


The Egyptian market has been disrupted in the short term by uprisings but, the long term outlook for the country’s refining and petrochemicals sectors looks positive, although delays are likely in planned projects according to BMI. Yet, continued uncertainty for political leadership will upset the downstream projects that depend on foreign investment in increases in oil and gas supply. Violence in the country is also a problem as it is pushing companies to provisionally stop local activities. If disruption continues over a long period of time, producers could decide to stop indeterminately their projects in the country.

Import dependence

Egyptian buyers have been turning to the black market where the exchange rate is far less favourable, therefore wiping out the gains achieved by the price reductions. The result is that when building in clearing and handling charges, new import offers are effectively more expensive than locally produced products, although the Egyptian market is still in deficit and highly import dependent.

Radical reductions

BMI do not expect the Carbon Holding’s project to come onstream before 2019, so there is a radical reduction in their petrochemicals forecast. Medium term ethylene capacity projections have reduced from 1.66 million tpa to 170 000 tpa and PE capacity has reduced from 1.58 million tpa to 225 000 tpa.

Ripe for investment

If Egypt overcomes the political and economic crises currently inflicting it then it is possible that the country will return to being a destination ripe for investment in petrochemicals. This is due to the fact that there is high potential in the domestic market, it has good trading relations with other markets in Africa, the Middle East and Europe and the sheer scale of its upstream resources.

Production levels

BMI believe that petrochemicals using industries will struggle to reach prerevolution levels of output. In 2012, vehicle output, which is a key consumer of engineering plastics, fell by 30% despite the addition of completely knocked down assembly facilities for Toyota and Geely. For last year, a 10% decline in total output is estimated on the back of closures of manufacturing sites and weakness in the wider manufacturing environment in the country. BMI do predict a return to output growth in 2014 but it is unlikely production will return to 2011 levels within the next five years. Nevertheless, Egypt is likely to remain heavily import dependent, particularly in the PP market, which will ensure that Egypt continues to be an export destination. 

Adapted from a press release by Claira Lloyd.

Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/10012014/egyptian_petrochemicals32/


 

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