Page 5 - FSUOGM Week 21

FSUOGM COMMENTARY FSUOGM
by the effects of the COVID-19 pandemic as well as increased uncertainty of future market assumptions.”
The global petrochemicals market was reel- ing from oversupply even before the coronavi- rus (COVID-19) crisis began, causing one of the sector’s leading players, Saudi Arabia’s SABIC, to book its first loss in a decade in the quarter ending December 31. Meanwhile, Kazakhstan’s economy is facing additional pressure from the slump in oil and gas prices triggered by the pandemic.
Borealis announced plans in May to cut costs to brace its business for the impact of the pan- demic, including a 25% reduction in 2020 cap- ital expenditure to €750mn. The Austrian firm later told Chemical Week that its decision to pull out of the PE project did not also apply to the PP plan.
A number of other contractors are attached to the project and it is unclear how Borealis’ announcement will affect their involvement. CB&I of the US has been contracted to pro- ject-manage construction of a propane dehy- drogenation unit, the PP plant and a 207-km propane pipeline and auxiliary infrastructure. China National Chemical Engineering, mean- while, was hired as the contractor for the pro- ject’s gas processing and chemicals facilities. China Development Bank (CDB) also pledged a $2bn loan.
UCC is yet to comment on Borealis’ exit.
Limited progress
Kazakhstan has had similar difficulty advancing other petrochemical projects.
In 2017, China’s Tianjin Bohua Petrochemi- cal signed an initial deal to invest $4bn in a plant in Aktobe. The facility was to produce 1.8mn tonnes per year of methanol and eventually 300,000tpyeachofPEandPP.Theintentionwas that the facility could use gas from Chinese-run
fields in the area as feedstock. However, there have been no further updates on the project, suggesting it has been abandoned.
In November last year, a symbolic ground-breaking ceremony was held for the construction of a 300,000 tpy methanol and a 600,000 tpy olefin plant in Aktau. The project, which the Kazakh government valued at $1.8bn, was to be implemented by a Singapore-based company called WestGasOil.
Denmark’s Haldor Topsoe signed a memo- randum of understanding (MoU) on the pro- ject the following month. But it could take years before there are any firm commitments on con- struction, especially in light of the COVID-19 crisis.
Kazakhstan has also looked into the develop- ment of a gas-to-liquids (GTL) plant to convert gas into motor fuels. Neighbouring Turkmen- istan launched a similar project in 2019, while Uzbekistan aims to complete one later this year. For Kazakhstan, this type of technology would help monetise its gas on the one hand and also meet its growing fuel needs.
A memorandum of co-operation (MoC) was signed in 2014 by Kazakh authorities and UK-based CompactGTL on a GTL facility in Aktobe that would produce up to 3,000 bpd of diesel. The following year it agreed on gas supplies for the plant from local producer KazakhOil Aktobe. But there have not been any updates on the ven- ture since then.
At the same time, Kazakhstan may find itself struggling to provide enough gas to sup- port a petrochemicals industry. The country is pushing ahead with a nationwide gasification programme, which is expected to see domestic demand soar over the coming years. At the same time, its oil industry may need more gas in the future to maintain reservoir pressure as oilfields mature. ™
Borealis signed an agreement to build the polyethylene complex in 2018.
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