The Middle East petrochemical industry has boomed over the last few decades on the back of inexpensive gas and ethane feedstock (priced at $75 c/mmbtu versus the historic $6-10 range in the last decade in the US and Europe). Historically, the Middle East has benefited from a natural feedstock advantage over other worldwide producers against the backdrop of a highly competitive and turbulent market.
Nevertheless, the growing local demand for gas by electricity producers and the limited supplies available has led to a diversification into propane/butane and naphtha based cracking plants in the Middle East, where the price advantage is far smaller. In fact, there is so much “stranded” excess propane in the US now as a result of the shale gas explosion that the price has dropped to around $500/ton, meaning that for the first time in a generation it is cheaper in the US than in the Middle East by about 23 per cent.
The potential effect of this on the Middle East producers could be very significant as their margins are squeezed and new capacity shifts to these new feedstock sources. The US shale gas/shale oil industry is already putting tremendous pressures on operators in Europe as they are now caught in between cheap chemical imports from the US and the Middle East.
Since my move to the Middle East in October 2010, customers have expressed growing interest in standardising on process optimisation software that can help them implement operational excellence programmes across manufacturing assets – from conceptual engineering, through basic engineering to efficient plant operations.
For example, refineries in the Middle East face increasing market pressures that have driven them to cut operating costs while maximising throughput and minimising inventories. Decision-makers must navigate challenges that encompass operational issues, external market forces and delivering a specific product slate based on an optimal economic plan. Another related trend is greater focus on the downstream supply chain management processes and software tools, which result in significant benefits for the refinery.
One of the most conspicuous trends in the Middle East oil and gas sector is the design and construction of a growing number of mega-sites across the region. This trend covers not only refineries, but also large integrated petrochemical plants. Furthermore, the Middle East is continuing to build refineries that are both world-class in size and complexity. These new assets enable production flexibility for manufacturers and the ability to exploit new product opportunities by delivering tightly specified products that can be sold at premium prices. In much of the Middle East, the focus is continuing to extend the value chain. In refining, many revamps of existing plants are in response to more stringent gasoline, diesel and sulphur regulations. In petrochemicals, the Middle East is also becoming a producer of new, higher margin products. We are also seeing a push into specialty and fine chemicals.
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Refineries and petrochemical companies |
In the last couple of years, we have seen the first manufacturing of polycarbonates and related specialty polymers emerge in Saudi Arabia. In addition, countries like Saudi Arabia are finding it difficult to secure new ethane for their petrochemical plants. So, increasingly new plants are switching instead to cracking products like propane, butane and naphtha and generating more diversified olefins as by-products to make different kinds of polymers for end users.
These opportunities and market pressures have culminated in a greater focus by manufacturers on integration and an executive level push towards optimising existing plants. We see a clear move towards energy management initiatives in the oil rich GCC states. Saudi Arabia remains the largest market. However, there is increasing growth and interest coming from the UAE and Qatar.
Energy reduction and energy efficiency is increasingly a priority for oil and gas companies working in the region as an opportunity to deliver enhanced profitability while also reducing environmental impact. Together, these operational trends and industry developments are layering complexity to the industry and thereby driving demand for solutions that deliver process optimisation and operational efficiencies. For petrochemical and refinery plants, investment in software tools is essential to manage and optimise the operation.
OPTIMISING PROFITABILITY
To help Middle East companies optimise their operations, process optimisation software has been adopted to deliver competitive advantage and profitability by increasing throughput and productivity, reducing operating costs, enhancing capital efficiency and decreasing working capital requirements. As the only company solely focused on process optimisation, AspenTech has become the technology partner of choice in optimisation software with Middle East oil, gas and chemical companies who want to optimise their assets to drive operational process efficiencies and to be
more profitable.
The recent launch of aspenONE V8 delivers breakthrough innovations in advanced process control, solids modeling, demand forecasting, energy and economic analysis. New and occasional users become proficient faster and experienced users can do more with usability and visualisation enhancements enabling engineers to collaborate more easily, shorten project times and increase productivity.
Continuing our drive for innovation, we introduced the first Content Marketplace for process optimisation with aspenONE® Exchange – this revolutionises process design by providing engineers with a one-stop shop to source equipment data, third-party content and AspenTech resources, so process engineers can build more comprehensive and more accurate models faster. AspenTech also launched the industry’s first web-based engineering and manufacturing software, whereby the new aspenONE features a web and mobile interface allowing process industry professionals to work with AspenTech software through web-enabled devices anywhere, anytime.
MIDDLE EAST OUTLOOK
There is no doubt that the outlook for refining and petrochemicals industries in the Middle East is bright, regardless of various economic fluctuations or new global capacity, such as US shale oil. The main drivers for project development continue to be a combination of high oil and petrochemical prices and economic growth combined with the commitment to invest in domestic infrastructure. However, shale gas in the United States is a new factor for the global energy and chemicals markets. The exploitation of this unconventional energy source is changing the game on a global scale.
With the future in mind, new innovations from AspenTech will continue to broaden the scope of optimisation for Middle East companies and open new avenues of possibility through technology. Continued integration of previously silo engineering and manufacturing tasks will allow process modellers to build more rigorous and comprehensive models with broader scope and to simultaneously model economics and energy efficiency. Advanced collaboration between teams sharing engineering data and anytime, anywhere access to plant information will open opportunities to expand productivity, simplify workflow and improve decision support. This optimisation journey has already begun its next phase through technology innovations, such as mobile and cloud computing platforms and search technologies that are transforming the process industries.
As process optimisation software continues to meet the needs of a changing global market, process engineers are better equipped to model, analyse and optimise processes to help achieve greater profitability for Middle East companies.