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Survival of Ethylene industry lies in technological breakthroughs

09
Apr '08

While the focus of global ethylene investment continues to shift towards the Middle East and Asia Pacific, Shell Chemicals see a future of continuing opportunity for ethylene producers across all the regions of the world.

Speaking yesterday at a joint meeting of the American Institute of Chemical Engineers, the American Chemistry Society and Ethylene Producers in New Orleans, USA, Shell Chemicals Vice President Strategy and Portfolio Allen Kirkley said: "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."

Producers in North America and Europe are likely to face continued modest demand growth and increasing pressures from imports, prompting further rationalisation and restructuring.

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.

Allen said it is likely new investments in the Middle East will become increasingly reliant on less advantaged feedstock, and he noted that soaring engineering, procurement and construction costs are impacting investments there and in Asia Pacific.

There is also a widely accepted industry expectation 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, the Shell executive said. However, this is not unusual in the historically cyclical petrochemicals industry.

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