Egypt’s $7.5bn complex exposes Nigeria’s failure to tap $20bn petrochemical potential
Nigeria in only 10% of its $20bn petrochemicals potential Losing $10bn annually in failure to develop petrochemicals sector Nigeria’s peers: UAE, Qatar, Iran, others attract $90bn investment in petrochemicals
Plant places Egypt top of high-quality petrochemicals producers Axens of France to provide tech for 7 licences
EGYPT, THE NORTH AFRI CAN economic giant’s incoming Red Sea petrochemicals complex, with total investments worth $7.5 billion will place it on top of countries in the world producing high-quality petrochemicals.
The country, which is Africa’s third largest economy, signed contracts for engineering works with French energy solution giant, Axens Ink, relating to manufacturing licenses of the Red Sea petrochemical complex, a statement sent to Business A.M. by Corinne Garriga, Axens’ head of corporate communications, quoted the Egyptian ministry of petroleum and mineral resources.
The incoming petrochemicals plant throws up a huge challenge to Nigeria, Africa’s top oil producer but its only midstream effort in the petrochemicals sector is way behind, despite the massive opportunities it has in the sector. To date, Nigeria has only a sole petrochemicals plant, the Indorama Eleme Petrochemicals Ltd (IEPL); whereas the country’s petrochemicals potential is in excess of $20 billion, according to a foreign expert in the sector.
Nigeria’s failure to develop
petrochemical plants is largely the reason manufacturing companies are importing about 80 percent of their raw materials worth over $10 billion, according to Business A.M.’s findings.
Manish Mundra, the managing director of IEPL Eleme, Port Harcourt, in a recent interview told our correspondent that Nigeria’s peers in the petrochemicals sector: Iran, Iraq, United Arab Emirates (UAE), Qatar, others had attracted over $90 billion in investments in the past 15 years, whereas Nigeria reckons with only what Indorama has so far invested – $2 billion.
The other two petrochemical plants in Nigeria are Warri Refinery and Petrochemicals Company (WRPC) and Kaduna Refinery and Petrochemicals Company (KRPC). But a reliable source said these two plants abandoned any plan to put their petrochemicals components on stream shortly after their commissioning in the 1980s.
Warri Refining and Petrochemicals Company was designed to produce carbon black, while KRPC was also designed to produce linear alkyl benzene to be used in the manufacture of detergents.
Majority of petroleum and petrochemical products serve as raw material inputs to other manufacturing industries: roads construction use bitumen, paints for building, ingredients for textiles for clothing and carpets, foams for beddings and furniture, medicines for hospitals, fertilisers for gardens, lubricants for vehicles and machinery, as well as plastics and polymers used in everything from computers, medical equipment, wind turbines and solar panels to cosmetics.
Business A.M. was told by a source at the Polymer Institute of Nigeria that about 80 percent of the various polymers used in the country are imported. “We must pressurise the government to build more petrochemical plants to make these materials available in the country,” the source said.
He said chances of the Warri and Kaduna refineries coming back on stream with their petrochemical components are next to hopeless.
The Eleme Petrochemicals plant (IEPL), which came on stream in 1995 as state-owned ran in fits-and-starts until it went moribund. By 2006, it was privatised and Indorama Group took over its management as a core investor.
As at 2013, IEPL had an annual installed capacity of 300,000 metric tonnes of olefins, 250,000 metric tonnes of polyethylene and 80,000 metric tonnes of polypropylene.
All the foam, plastic, paint and textile companies in the country depend on derivatives most of which are imported, because the local petrochemical industry has not received due attention.
Products made from petrochemicals include: plastics, soaps, detergents, solvents (such as paint thinners), paints, drugs (example aspirin), fertilizer, pesticides, explosives, synthetic fibres and rubbers, and flooring and insulating materials. They are also found in such common products as cars, clothing, compact discs, video tapes, electronic equipment, and furniture.
Egypt’s minister of petroleum and mineral resources, Tarek El Molla, and the French ambassador to Egypt, Stéphane Romatet, witnessed the signing of the engineering works contract relating to manufacturing licenses of the Red Sea petrochemical complex.
The contract was signed by Mohamed Abady, chairman of Red Sea National Company for Refining and Petrochemicals, and Jean Sentenac, CEO of French Axens Company.
According to the contract, Axens will provide the technology for a total of seven licenses, representing 50 percent of the whole project’s licenses.
Minister El Molla stated that the construction of the Red Sea Petrochemicals complex will place Egypt on top of the countries producing high-quality petrochemicals.
He noted that Axens has a track record in technology expertise, adding that the energy solutions provider has been collaborating with the Egyptian oil sector for years in executing major projects. Axens’ Sentenac asserted the company’s commitment to providing the cutting-edge technologies for the project and to execute it according to schedule.