The SABIC cracker unit which uses ethylene and propylene as feedstock. JEDDAH: A team of scientists at Saudi Basic Industries Corporation (SABIC) is exploring new technologies to develop crackers that can use a range of feedstocks to produce olefins on increasing difficulty in getting allocations for its gas-based crackers, said Abdul Rahman Al Ubaid, executive vice president, technology and innovation at SABIC Wednesday on the sidelines of the Middle East Technology Forum 2011 in Dubai. "We are doing extensive research on replacing gas-based crackers with ones that use a mix of syngas, LPG and other hydrocarbons," he said. "A few years ago no one would have imagined that we would face a shortage of gas. But today, we are facing a shortage. And therefore, we need new technology to replace gas as a feedstock," he said. Though the capacity additions in the global petrochemical industry are increasingly favoring Asia-Pacific and Middle Eastern locations, current developments led to finding new ways to replace gas-based crackers. The major feedstock for petrochemicals production has historically been naphtha and natural gas. Coal and liquefied petroleum gas (LPG) is also used in the production of petrochemicals. However, growing concerns on environment necessitate a shift on alternative feedstock. No new gas allocations to the petrochemical producers have been made in Saudi Arabia since 2006, according to industry sources. In 2015, SABIC is expected to be the world's largest petrochemicals producer in tonnage terms, according to the Gulf Petrochemicals and Chemicals Association. Saudi Arabia is adding an estimated 5.5 million mt/year of ethylene capacity in the next four years. At the fifth annual forum of the GPCA held in Dubai in December 2010, SABIC Chairman Mohamed Al Mady said more Saudi Arabian olefin producers were looking to move to other feedstocks from gas. Since most of the gas is associated with oil, it has been difficult to increase production in the wake of OPEC's targets for oil output, another official source involved in developing gas fields in the Kingdom said. "OPEC has slashed Saudi Arabia's oil production quota to 8.051 million b/d. Industry sources said the Kingdom needs to be operating at 10 million b/d to provide enough ethane for crackers to run at 100 percent capacity," he said. SABIC are able to produce ethylene at a cost of about $300/mt from gas-based crackers giving them a competitive edge over Northeast Asian producers whose steam crackers are mostly naphtha based. "SABIC will incur higher cost on feedstock if it shifts to other sources to run its crackers," a trader said. The Saudi Arabian government is also supporting new investments downstream of the basic cracker derivatives, in an attempt to diversify the economy and create more jobs.
