Saudi petchem feedstock to return sooner than expected

Feedstock supplies to Saudi Arabian petrochemical plants are likely to be restored sooner than had been expected, allaying concerns of a prolonged shortage following attacks on oil facilities in the country.

Saudi Arabia has restored half of the 5.7mn b/d of crude production that was affected by the attacks on key oil infrastructure over the weekend, oil minister Prince Abdulaziz bin Salman said late yesterday. Full operations are expected to resume by the end of September.

The country will fulfil all its crude oil supply obligations to customers this month, partly by drawing down storage.

Further downstream, petrochemical feedstock remains curtailed across the country after the 14 September attacks. State-owned Sabic and other Saudi petrochemical producers such as Tasnee, Sadara and Advanced Petrochemicals announced feedstock limitations a day after the attacks.

Initial expectations of the feedstock disruption ranged from 3-6 months, as Saudi producers awaited information on the extent of damage to the affected oil installations.

But the confirmation of a much quicker recovery in crude production means petrochemical feedstock supplies are also likely to return sooner than had been expected, although no firm timelines have been announced.

Petrochemical companies have not yet said when they expect feedstock supplies to resume. Listed companies are expected to make statements to the Saudi stock exchange on the status of their operations later this week.

The attacks halted production of an estimated 2bn ft³/d (21bn m³/yr) of associated gas, cutting Saudi supplies of ethane and NGLs by 50pc.

Sabic informed its Asia-Pacific and Middle East customers on 16-17 September that it would be unable to meet existing polymer orders for September because of the feedstock problems.

The shortage was at first largely restricted to producers in Jubail on the east coast, but west coast-based PetroRabigh yesterday became the latest company to announce feedstock supply shortages.

PetroRabigh's supply of ethane gas has been cut by 8pc, while its crude oil supply has fallen by 12.5pc. The company is a joint venture between state-owned Saudi Aramco and Japan's Sumitomo Chemical.

Yansab, a Sabic affiliate located in Yanbu on the west coast, has also announced a 30pc feedstock curtailment. Yansab produces 400,000 t/yr of polypropylene PP, 400,000 t/yr of linear low-density polyethylene (LLDPE) and 400,000 t/yr of high-density polyethylene (HDPE).

Saudi Arabia's three major petrochemical sites — Jubail, Rabigh and Yanbu — were all affected by the feedstock shortage as of yesterday.

National Petrochemical Industrial (Natpet) is still expected to restart its 400,000 t/yr PP plant in Yanbu as planned by November. The Saudi firm suspended production in October last year following a fatal fire.

The company's PP plant is fed by a 420,000 t/yr propane dehydrogenation (PDH) unit.

Natpet ramped up production at the PP plant through test runs in August. It produces PP raffia, random and fibre under the brand name Teldene, using LyondellBasell's Spheripol technology.

Natpet is likely to actively target Turkey, a key market for its PP fibre exports, once it resumes full production.