2017 Through the Rear-view Mirror
Part 5: New Projects
Mergers and acquisitions, new petrochemical projects, the dismantling of US environmental regulations and a tussle over the hazards of pesticides in Europe, along with a protracted discussion over life after Brexit and a few changes in corporate top management echelons – these were all topics that occupied the attention of the international chemicals and pharmaceutical industry in 2017. Many companies made commitments to large petrochemical projects – in the Middle East as well as in the shale gas-flooded US and in Europe.
Investment in new Chemical Plant Booms
The Middle East was clearly the hotspot for new chemical projects in 2017. The region’s companies and overseas partners made some huge project commitments, worth many billions of dollars, as the region continued to diversify into downstream petrochemicals and plastics production.
Saudi oil and chemical giants Aramco and SABIC pledged to develop a fully integrated crude oil-to-chemicals (COTC) complex in Saudi Arabia, producing around 9 million t/y of chemicals and base oils. A location for the complex, which is expected to commence operations in 2025, has not yet been disclosed.
The COTC deal followed previous agreements with Chinese companies to develop refining and petrochemical plants in both China and Saudi Arabia, targeting key downstream markets as the Middle East kingdom seeks to diversify from just exporting oil.
The Saudi groups are also investing overseas, notably in Russia and the US. Aramco signed a Memorandum of Understanding (MoU) in October 2017 with Russia’s Sibur and the Russian Direct Investment Fund (RDIF) to explore opportunities for cooperation and investment in Russia’s and Saudi Arabia’s petrochemical markets.
Aramco also bought a 50% share last year in Malaysian group Petronas’ wholly owned subsidiary, PRPC Polymers, allowing it to participate in the Refinery & Petrochemical Integrated Development (RAPID) project in Johor, Malaysia, which will produce 3.5 million t/y of petrochemicals by 2020.
During US President Donald Trump’s two-day visit to Saudi Arabia in May 2017, Dow Chemical and Mosaic signed agreements for separate projects in the Kingdom.
Dow said it would build a plant in Plaschem Park, Jubail, to produce a range of acrylic-based polymers for the local industrial and architectural coatings, water-treatment and detergent markets.
It also signed an MoU to study a siloxanes and silicones complex.
Fertilizer group Mosaic advanced a third phosphate fertilizer project in Saudi Arabia. The facility, likely to be implemented in phases, will start production early in the next decade, adding up to an extra 3 million t/y of capacity. Total investment is estimated at $6.4 billion. Mosaic has previously been working with SABIC and Saudi Arabian Mining Company Ma’aden on an $8 billion phosphate plant that started up in August 2017.
In other Middle East projects, Abu Dhabi National Oil Company (ADNOC) received government approval to spend more than $109 billion over the next five years. The state-owned energy group will expand its petrochemicals output from 4.5 million t/y currently to 14.4 million t/y by 2025. Most of the money will be spent downstream with plans to convert naphtha into gasoline and aromatics.
A proposed aromatics complex will include production of 1.4 million t/y of PX and 200,000 t/y of benzene with completion scheduled for 2022. The aromatics production will be integrated within ADNOC’s Ruwais refinery, as will Borouge 4, a mixed feedstock cracker and derivatives complex producing polyolefins and other products being built in partnership with Borealis and due on stream around 2023.
According to reports circulating last year, Kuwait’s Petrochemical Industries Company (PIC) was also planning investments of nearly $8 billion over the coming years in Bahrain and other countries, in new plants as well as expansions of existing facilities.
PIC could build a PX plant in Bahrain in a joint venture with Bahrain’s state-owned National Oil and Gas Authority. It also has plans to build a propylene plant and a downstream 550,000 t/y PP plant in Alberta, Canada. This project, originally announced in April 2016, is expected to proceed as a 50:50 jv with Canada’s Pembina Pipeline. In South Korea, PIC also plans to build a 400,000 t/y PP plant, and the company is already working on a 750,000 t/y ethylene glycol plant in Freeport, Texas, USA, due for completion in October 2019.
In Iran, French energy giant Total reached a preliminary agreement with the country’s National Petrochemical Company to invest up to $2 billion in three petrochemical plants. Iran’s government news agency Shana said both parties had agreed to build plants with a total annual capacity of 2.2 million t of petrochemical and polymer products.
To read more about the important events of 2017, click on the links below.
- Part 1: The Rocky Road to Mega-mergers
- Part 2: Chemical Producers Lead M&A Activity in 2017
- Part 3: Pharma M&A quieter in 2017
- Part 4: Distributors Proactive in M&A
- Part 6: Shale Gas Fuels US Investment
- Part 7: Timid Awakening of European Investment
- Part 8: Asia sees ongoing investments
- Part 9: Trump Rolls Back Environment Rules