Market and product
Asia petchem makers to stay reliant on naphtha
TAIPEI (ICIS)--Naphtha will remain the primary feedstock for Asian petrochemical manufacturers in the near term despite the advent of shale gas in North America that promises much cheaper cost of production, an industry executive said on Wednesday.
"The main issue with shale gas feedstock is that we basically we get lesser varieties of output such as ethylene and its derivatives," Petrochemicals Industry Association of Taiwan (PIAT) executive manager Jack Shieh told ICIS.
"The impact of shale gas will be huge. The cost of producing a tonne of ethylene [from shale gas feedstock] is estimated by some at around $300 while those based on naphtha can cost up to $1,000. So that is three times higher," he said.
But Asia will not immediately benefit from the shale gas revolution, given uncertainties over delivery of gas feedstock from North America into this region in liquid form, Shieh said.
Pursuing this would entail processes that may need approvals at government-to-government levels and could involve huge shipping costs, he said.
Environmental issues are also hounding shale gas extraction, which requires huge quantities of water, Sheih cited.
For all its high cost, naphtha has its production advantages that meet the requirements of Asian cracker operators, the PIAT executive said.
"We can get a higher number of chemicals from naphtha – such as propylene, butadiene (BD) and most importantly, we get a lot of aromatics products," Shieh said.
"We still have a high degree of confidence about the use of naphtha in the future," he added.
Current efforts to use shale gas to produce petrochemical in Asia are still at their nascent stage and would take time to develop, he said.
Shieh cited that in China, some producers looking at a shale gas-to-methanol-to-olefins production are stumped by poor economics.
The PIAT executive is speaking at the sidelines of the Asia Petrochemical Industry Conference (APIC), which will start on 9 May in Taipei.
The two-day conference will be attended by around 1,200 delegates from all over the world, he said.
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