Petrochemical industry in dire state
THE ABYSMAL STATE of Nigerian refineries has led to the near death of one of the most important components of the oil and gas business, the petrochemical industry. The petrochemical industry, a subsector of the oil and gas industry lives on the back
THE ABYSMAL STATE of Nigerian refineries has led to the near death of one of the most important components of the oil and gas business, the petrochemical industry. The petrochemical industry, a subsector of the oil and gas industry lives on the back of the crude oil refining capacity but Nigeria, with four refineries, processes far less than 445,000 barrels of crude oil per day, indeed far less than 30 percent of their utilization capacity.
The uses of petrochemicals cannot be over exaggerated as they can be found in every industry, ranging from services to manufacturing and even pharmaceuticals. The International Energy Agency (IEA) described petrochemicals as an “energy blind spot” because policy makers barely pay attention to it and Nigeria too is guilty of this. So much fanfare is made of the refineries such that an integral part is often overlooked.
Petrochemical products, like olefins (ethylene, propylene, bu¬tadiene) and aromatics (benzene, toluene, xylene) are used in end- user markets such as paints, plas¬tics, explosives and fertilizers sub-sectors. They are also required to manufacture many parts of the modern energy system, including solar panels, wind turbines, batteries, thermal insulation and electric vehicles.
The country currently has just one fully-fledged petrochemical plant, Indorama Eleme Petrochemicals Company Limited. Indorama Eleme Petrochemical Limited (IEPL) located in Port Harcourt, Rivers State, has remained a lone ranger in Nigeria’s petrochemi¬cal industry, and as at 2013, the firm had an annual installed capacity of 300,000 metric tonnes of ole¬fins, 250,000 metric tonnes of polyethylene and 80,000 metric tonnes of polypropylene, which are high value raw materials that could earn the country so much in foreign exchange if exported.
Even the Warri and Kaduna refineries that ought to provide the much-needed leap for the country’s petrochemicals indus¬try appear to have failed to pro¬duce products that will meet the yearning of their stakeholders.
For instance, at inception, the two refineries were designed to produce carbon black and linear alkyl benzene (LAB) used in the manufacture of deter¬gents. But this capacity has also been affected by the low crude oil refining capacity in both firms.
The country’s policy makers and operators of the nation’s oil and gas industry have failed to see the inherent potentials in developing the petrochemical industry and using it as a propeller to launch Nigeria into industrial development.
Commenting on the viability of the petrochemical industry and how it can boost the economy, Abiola Kehinde, a professor at University of Lagos, in a research study disclosed that the Nigerian petrochemicals market (excluding export of crude oil) was worth $14.03 bil¬lion in 2008 with forecasts pro¬jecting it could hit $29.7 billion by the end of 2015.
According to a recent report by IEA, petrochemicals will drive more than a third of the growth in world oil demand by 2030, and nearly half the growth by 2050, adding nearly seven million barrels of oil a day.
Fatih Birol, executive director of International Energy Agency, also said petrochemicals are particularly important given how prevalent they are in everyday products.
“Our economies are heavily dependent on petro- chemicals, but the sector receives far less attention than it deserves. Petrochemicals are one of the key blind spots in the global energy debate, especially given the influence they will exert on future energy trends.
“In fact, our analysis shows they will have a greater influence on the future of oil demand than cars, trucks and aviation,” he said.
Demand for plastics, according to the study remains the key driver for petrochemicals from an energy perspective, adding that it has outpaced all other bulk materials (such as steel, aluminum, or cement), nearly doubling since 2000.
Nigeria needs to speed up the revamping of its refineries to catch up with the rest of the world, even Saudi Arabia, a leading oil producer announced a partnership with SABIC to build a $20 billion petrochemical plant.
Experts like Abiola have maintained that a re¬structuring of the operation of Nigerian refineries, with greater private sector participation, would likely increase the capacity utilisation of the refineries.
‘‘Once this is instituted, the cost structure of the Nigeria’s petrochemicals market would improve as crude oil is the main feedstock for the production of olefins and aromatics in Nige¬ria,” he wrote.
IEA also reported that major oil companies were increasingly pursuing integration along the petrochemical value chain.