Shell Chemicals exec rates global ethylene market prospects

London - "By 2015, ethylene output from producers in the Middle East, China and other Asia Pacific countries is likely to exceed the combined production of Europe and North America, believes Allen Kirkley, Shell Chemicals vice president Strategy & Portfolio. However, he added, the future offers continuing opportunity for ethylene producers across all the regions of the world.  

Producers in North America and Europe are likely to face continued modest demand growth and increasing pressures from imports, prompting further rationalisation and restructuring, Kirkley said at a recent joint meeting of the American Institute of Chemical Engineers, the American Chemistry Society and Ethylene Producers in New Orleans.

According to Kirkley, ethylene investments in these two regions are likely to focus on replacement capacity and increasing the reliability, efficiency and competitiveness of plants. Integrated energy and petrochemicals producers, including Shell companies, will also continue to focus efforts on maximising their oil chemical advantage.

Meanwhile, new investments in the Middle East are likely to become more reliant on less advantaged feedstock, continuied the Shell executive, who also noted how spiraling engineering, procurement and construction costs are impacting investments in that region and in Asia Pacific. It is also likely, he said, that operating rates will come under pressure in the next two or three years as Middle East and Asia Pacific production moves ahead of demand in those two regions - in line with the historic petrochemicals market cycle.

Longer term, Kirkley anticipates increased ethylene production based on a new and growing slate of feedstock ranging from biological sources such as ethanol and agricultural biomass to coal. "We also expect the industry to rise to the challenge of Climate Change with a range of solutions stretching from production improvements and carbon sequestration to a growing slate of products made from CO2," he said.

To meet the coming challenges, the Shell Chemicals VP said the chemical industry must come up with some significant technological breakthroughs: "Our track record suggests that given time and significant, sustained investment, chemists and chemical engineers, working with other scientists and technologists, will help make this happen."