Oil and gas landscape in the coming years is projected to be radically different because diesel demand is expected to decrease in 2035 by 15 percent lower than 2018. As technology improvements in vehicle efficiency, renewable substitution, and autonomous vehicles continue to change demographic behaviour, petrol and diesel demand will decline.
The United States fuels market is expected to start declining soon, but global petrochemicals demand is expected to grow three to six times the global fuels demand between 2018 and 2026. The global compound annual growth rate from 2018 to 2026 for petrol, propylene and paraxylene is greater than 1 percent, 4 percent and 5 percent, respectively. This demand growth is being driven by the rise of the middle class in emerging nations.
In this light, petrochemicals are set to drive growth in world oil demand and Nigeria can benefit in the long run if it puts its acts together and encourages strategic private sector investment into its petrochemicals industry.
Petrochemicals are components derived from oil and gas that are used in daily products such as plastics, fertilisers, packaging, clothing, digital devices, medical equipment, detergents and tyres. They are becoming the largest drivers of global oil demand, in front of cars, planes and trucks, according to a major study by the Paris-based International Energy Agency (IEA), ‘The Future of Petrochemicals released in 2018’.
‘The Future of Petrochemicals’ is part of a new IEA series shining a light on “blind spots” of the global energy system; issues that are critical to the evolution of the energy sector but that receive less attention than they deserve.
Petrochemicals are set to account for more than a third of the growth in world oil demand to 2030, and nearly half the growth to 2050, adding nearly 7 million barrels of oil a day by then. They are also poised to consume an additional 56 billion cubic metres (bcm) of natural gas by 2030, and 83 bcm by 2050.
“Our economies are heavily dependent on petrochemicals, but the sector receives far less attention than it deserves,” Fatih Birol, the IEA’s executive director, said.
“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,” Birol said.
Nigeria built three petrochemical plants in Eleme, Warri and Kaduna. These plants have combined capacity to produce 240,000 metric tonnes of polyethylene, 130,000 metric tonnes of polypropylene, and 18,000 metric tonnes of carbon black per annum.
However, a few years of operation and all the plants became moribund. A research conducted by the University of Benin, Nigeria, identified the reasons for collapse of the petrochemical plants to include irregular importation of feedstock, poor maintenance and lack of technical and managerial capacity.
One of the plants at Eleme was sold to Indorama Petrochemicals in 2006 and now operates at an annual average availability of 99 percent, having newly-built largest single-train fertiliser plant in the world. Indorama today is building a petrochemical hub in Africa at Eleme.
“Nigeria spends about $11 billion on imported petrochemical-related products in a year. You can understand why Dangote Industries is building one of the largest petrochemical complexes in the world in Nigeria,” said Emmanuel Anyaeto, director/CEO of California-based Integrated Gas and Energy Services, LLC, in an interview with a Nigerian national daily.
Demand for plastics, the key driver for petrochemicals from an energy perspective, has outpaced all other bulk materials (such as steel, aluminium, or cement), nearly doubling since 2000. Advanced economies currently use up to 20 times more plastic and up to 10 times more fertiliser than developing economies on a per capita basis, underscoring the huge potential for global growth.
STEPHEN ONYEKWELU
