Saudi Arabia hikes ethane prices; Westlake to expand US ethylene unit

Petrochemicals news you need to know.

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Saudi Arabia raises ethane prices, mulls downstream share sales

Saudi Arabia has raised the price of ethane by 133%, from 75 cents/million Btu to $1.75/million Btu, and increased the price of methane by 67%, from 75 cents/million Btu to $1.25/million Btu.

The price hike will bring Saudi ethylene producers closer to those in the United States in terms of feedstock costs, though the new Saudi price is still $1 less than the depressed 2015 US ethane prices and Saudi producers will continue to have the lowest feedstock costs globally (see chart below).

NYMEX Mont Belvieu Ethane Futures (Front Month). Sources: EIA and NYMEX futures prices.

According to Reuters, Saudi Arabia is also considering selling shares in refining ventures with foreign oil firms as part of a privatization drive to raise money in an era of cheap oil.

On January 8, Saudi Aramco, the world's largest oil company, issued a statement saying it was studying options to allow public participation in its equity, including the stock market listing "of an appropriate percentage of the company's shares and/or the listing of a bundle (of) its downstream subsidiaries."

Meanwhile, Kuwait plans to launch a new integrated downstream company to manage a $27 billion oil refinery and petrochemical project in its southern Al Zour region, the Arabic language daily Alseyassah reported on January 5.

The newspaper said investments in the project, to be called Kuwait Petrochemicals and Refining Company, are estimated at $16 billion for the Al Zour oil refinery and $10 billion for the petrochemicals complex, with the remainder invested in gas supply facilities.

GCC plastics growth to slow down to 3% a year by decade’s end

Plastics production in the Gulf Cooperation Council (GCC) countries will grow by 3.2% a year between 2015 and 2020, down from 11.7% in 2005-2015, according to a study released by the Gulf Petrochemicals and Chemicals Association (GPCA) earlier in January.

Growth in Oman is projected to be the strongest in the region, at a 17.7% compound annual growth rate (CAGR), followed by Kuwait with a CAGR of 7.1%. Saudi Arabia is expected to see annual growth of 3.2%, down from 4.9% in the last decade.

GCC plastics production capacity has tripled in the last 10 years, reaching 26.2 million tons (mtpa) in 2015, and clustered around major projects in Saudi Arabia, according to the GPCA.

Westlake approves ethylene expansion, Braskem delays Mexican plant start-up

Westlake Chemical has approved plans to expand ethylene capacity at its Calvert City, Kentucky facility, the company announced on January 8. This expansion will add 32,000 tons (70 million pounds) of annual ethylene capacity to the facility in the first half of 2017.

This expansion, which combined with incremental capacity increases will total about 45,000 tons (100 million pounds) of annual capacity, will add to the 113,000-ton (250-million-pound) ethylene expansion at the company’s Petro 1 facility in Lake Charles, Louisiana, which is expected to start in Q2 2016.

Meanwhile, Methanex Corporation announced on December 29 it had started up its 1 mtpa Geismar 2 methanol plant in Geismar, Louisiana, which had been relocated from the company's production site in Punta Arenas, Chile.

The company has increased its operating capacity by approximately 3 million tons in the last three years.

Polyethylene production at Braskem Idesa's Ethylene XXI project in Coatzacoalcos, Mexico, has been delayed and is now expected to start in Q2 2016, ICIS reported on January 7.

The Ethylene XXI project comprises a 1.05 mtpa ethane cracker, two high-density polyethylene units totalling 750,000 tpa and one low-density polyethylene unit of 300,000 tpa.

ExxonMobil’s Torrance refinery to remain shut until mid-year

Gasoline production at ExxonMobil’s 155,800 barrel-a-day refinery in Torrance, California, will remain offline until mid-2016, more than a year after the February 18, 2015 explosion in the FCC’s electrostatic precipitator (ESP), according to OPIS’s December 31 update.

ExxonMobil had planned to temporarily use a refurbished ESP to get the FCC operating at reduced rates but scrapped the plan in Q4 2015 because it didn’t reach an agreement with air quality regulators. ExxonMobil has instead moved ahead with repairs to the damaged ESP, OPIS said.

As Petrochemical Update reported in late 2015, refiners in the US and Canada have scheduled about $1.3 billion of maintenance spending in 2016, and the number of scheduled refinery turnaround projects is expected to increase in 2016 after it fell sharply in 2015 as refiners delayed projects to process the flood of inexpensive crude oil.

Meanwhile, Huntsman does not plan to have a turnaround at its methyl tertiary butyl ether (MTBE) facility in Port Neches, Texas, in 2016, Platts reported, citing a company spokeswoman.

The 766,000 tpa unit underwent a turnaround in Q1 2015 and more maintenance work in October and November, when electrical issues at the Port Neches site led to shutdowns at a number of units.