GPCA: Uncertainty prevails on tapping Saudi shale gas reserves for petchems
Dubai (Platts)--28Nov2012/533 am EST/1033 GMT
Saudi Aramco is "diligently" exploring shale gas reserves in Saudi
Arabia, however uncertainty reigns over whether such reserves could be
tapped by petrochemical companies, top officials from the country's
petrochemicals industry said Wednesday at Seventh Annual Gulf Petrochemicals
and Chemicals Association forum in Dubai.
"We know that shale gas supplies would come as a strong boost for us.
However, it's for Saudi Aramco to decide when and how it will be supplied,"
Prince Saud bin Abdullah bin Thenayan Al-Saud, Chairman of SABIC, told Platts
on the sidelines of the forum.
"All questions on gas supplies are to be answered by Saudi Aramco,"
Mohammed Al Mady said during a panel discussion at the forum. "The prime
question is where is the gas?"
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Saudi Aramco sells gas to several other petrochemical producers in the
country through SABIC.
Al Mady told reporters at Jubail in November that the company is
looking forward to making investments in shale gas-based petrochemicals
production outside Saudi Arabia. He said Wednesday at the GPCA forum that
there were no further developments in this regard so far.
US oilfield services company Baker Hughes in April estimated Saudi
Arabia shale gas reserves at 645 Tcf -- the fifth largest such reserve in the
world. The country's conventional gas reserves at estimated to be around 279
UNCERTAINTY OVER FEEDSTOCK SUPPLIES, PRICES
Sources at Saudi Aramco maintain that Saudi Arabia's Ministry of
Petroleum and Mineral Resources is in talks with the oil and gas producer to
raise the price at which feedstock gas is sold to the country's petrochemical
Saudi Arabia currently supplies gas to the country's petrochemical
giant SABIC at a rate of $0.75/MMBtu, which is the lowest price in the world.
Riyadh-based investment bank Al Rajhi Capital said in a report early
this year that gas prices in Saudi Arabia may be raised in 2013. Saudi
Investment Group Managing Director Suliman Al Mandeel told reporters in
November that Saudi petrochemical producers do anticipate a rise in gas
prices and fear that such a rise could impact their margins.
"In reality feedstock cost in Saudi Arabia have already risen," Moayyad
Al Qurtas, CEO of Riyadh-based petrochemicals producer Tasnee, said at the
GPCA forum. "Only a small proportion of feedstock being used in petrochemicals
industry in Saudi Arabia is ethane. The rest is LPG," Al Qurtas said to
explain the reason behind high feedstock prices.
TECHNOLOGY IS THE SOLUTION
Al Mady stressed that greater emphasis on technology will help
petrochemical companies in the Middle East fare better. At the GPCA, he
termed shale gas a "revolution" in the petrochemicals industry and stressed
that the industry can not be "oblivious to the sustainable use of hydrocarbon
Besides shale gas, Al Mady said new technologies that convert coal to
olefins and syngas to chemicals are the others to watch for.
The petrochemicals industry in the Gulf Cooperation Council grew 13.5%
year-on-year in 2011 and the region's petrochemicals producers manufactured
products worth $100 billion in the same year, SABIC's CEO said.
--Shashank Shekhar, email@example.com
--Edited by Maurice Geller, firstname.lastname@example.org