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Thu 25 Dec 2008 04:00 AM

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Poly prospects: Lyondell Basell thinks big

Despite the cyclical nature of the market and a global economic slump, downstream giant LyondellBassell are predicting big things for the Middle East's polyolefin market. Petrochemicals Middle East speaks exclusively to two of its key players in the sector.

Despite the cyclical nature of the market and a global economic slump, downstream giant LyondellBassell are predicting big things for the Middle East's polyolefin market. Petrochemicals Middle East speaks exclusively to two of its key players in the sector.

LyondellBasell, the Dutch polymer, petrochemicals and fuels company and specialist in polyolefins technology and production, is on the verge of announcing the commencement of operations at two polyolefin plants in Saudi Arabia, both formed in joint ventures with the local Tasnee and Sahara Olefins Company.

One of the plants is the new ethylene and polyethylene complex in Al-Jubail Industrial City, named SEPC (Saudi Ethylene and Polyethylene Company), which has a gas cracker and two 400 kilatonne per annum (kta) polyethylene plants.

The polyolefin market shows very healthy numbers and global demand will continue to grow by 5% – exceeding GDP.

The second is the Al-Waha Petrochemical Company joint venture, which is a 450 kta polypropylene plant with a propane dehydrogenation unit.

"We have had a relationship with Tasnee and Sahara for many years which began with the formation of Saudi Polyolefins Company (SPC) in 2001 and the plant start-up in 2004. We are now in the process of expanding the plant to 720 thousand tonnes per year of polypropylene capacity which will be ready by the beginning of next year," says Yves Bonte, senor vice president, polypropylene, LyondellBasell.

"Our second venture with Tasnee and Sahara, Saudi Ethylene and Polyethylene Company, was formed in 2006. The complex has a capacity of 1 million tonnes of ethylene resin and about 285 thousand tonnes of propylene."

"The polyethylene and polypropylene from the two facilities will be sold back into the Middle East region, as well as into Asia and some of Europe, states Bonte."

The company was formed when Lyondell and Basell merged at the beginning of 2008, only eight months before the global economy began its sudden descent.

However according to Bonte, while the polyolefin and polypropylene markets may go through slower periods or slight dips much like any other industry, they have actually shown steady growth for many years and there is no suggestion this will change.

"This industry typically has a cyclical behaviour. But when you look at polypropylene and polyethylene markets individually, over a long period they have shown healthy growth, compared say to the steel industry," says Bonte.

"The polyolefin market shows very healthy numbers and we believe that in the coming years the global demand will continue to grow by 5% - exceeding global GDP growth."

And it is the Middle East that is set to be the hotbed of the industry's growth in the coming years as more plants continue to come on line in the region.

"Clearly the Middle East shows much stronger growth. Once you start to build manufacturing capacity in a particular region, it triggers the downstream industry and investment in downstream for the region. Many of our customers in other regions are now looking to invest into the Middle East, so I foresee a very healthy growth in the coming years," says Bonte.As for global capacity, Bonte believes that there is a strong wave of new builds which will bring the capacity up, but that there will also be the closure of older facilities balancing the global supply and demand.

Bonte believes that as the Middle East increases its polyethylene and polypropylene capacity, it will start to become a world hub for the polyolefin industry.

"There is no doubt that the Middle East will increasingly become a key supply source of polyethylenes and polypropylenes for the rest of the world. If you look at the next couple of years, I believe there will be a build up of about 5.5 million tonnes of polypropylene capacity in the region, and more and more it will become the centre of gravity for polyolefin manufacturing," explains Bonte.

The strategy for the Middle East during this period is clearly extremely important for the company. LyondellBasell has strategically established its headquarters for the Middle East, Africa and the Indian Subcontinent in the Emirate of Dubai.

"This office is responsible for bringing the sales and marketing expertise of LyondellBasell to the table here in the GCC and the broader region we are responsible for. We are also responsible for the management and optimisation of product offtake - around 2 million tonnes from our Middle East JVs - which we will bring to the global market," says Mitchell Killeen, divisional vice president - Middle East.

"To do this we draw on many years of experience. The focus now is building on the local team to be able to manage the scope of our proposed projects. It is about bringing LyondellBasell skill to the market, but doing so with local people and local talent, which we will need to develop and who contribute to the industry in the GCC."

The plan then is for considerable capacity growth in the Middle East for the duration of the foreseeable future, with new plants either coming onstream shortly or proposed plants still in the pipeline.

"For the short-term we are bringing new capacities on-stream in the Middle East, with the expansion of the SPC and start up of SEPC facilities. At the same time our third venture - the Al-Waha JV - will soon startup a new polypropylene plant. This will be the biggest Spherizone process polypropylene plant in the world, scheduled to go on-stream early next year," reveals Bonte.

"I will add to that by saying we will continue to expand our sales and marketing network, especially in the Asian and Middle Eastern regions, to manage these additional capacities. We will also focus on developing new applications and technologies to contribute to the development of polyolefins," says Killeen.

Regional potential for producers continues to expand as the Middle East builds its own value-added economic model. Provided that growth continues, the polyethylene and polypropylene developments in the region look set to contribute to a flourishing polyolefin industry.

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