MOSCOW (MRC) -- Total has disclosed that it is evaluating construction of a new gas cracker at its Deasan, South Korea, joint venture (JV) with Hanwha Chemical, reported Chemweek.
The company in its strategy and outlook presentations in New York on 24 September, said that petrochemicals are a major feature in the company’s future investments. Speaking about the segment, Bernard Pinatel, president/refining and chemicals at Total, said that the company is focusing on growing petrochemicals, not refining. The petchems market, he said, is growing at 3%/year, driven by demographics, growing world population, the emergence of the middle class and megatrends around lightweight materials. "All of this drives the growth in plastics and polymers."
Pinatel says that there are three main principles the company adheres to when considering expansion: access to low-cost gas feedstock, including ethane, propane, and butane; balance between monomers and polymers in any given project; and investing in low-carbon solutions by leveraging biofuels, biopolymers, and embracing the circular economy. "Today, the petchems market is in a short-term imbalance because of new capacities coming onstream on the US Gulf Coast and in Asia…We have the first wave in the US investments coming onstream in the 2017–20 period, so the bulk of it is almost beyond us. But this weighs heavily on the supply and at the same time on the demand. We see a slowdown most notably linked to the trade war between China and the US, so short term, this market is suffering from some kind of imbalance," he said.
For Total, this is not so much of a concern because most of its projects are due to start up post-2020. Total operates six global petrochemical platforms and the new investments will rely on low-cost feedstock, competitive capex by leveraging the company’s platforms, and by balancing capacities between monomers and polymers.
The company is developing four major petchems projects: in the US, South Korea, Algeria, and Saudi Arabia. At Daesan, South Korea, the JV is investing USD1.3 billion to add 400,000 metric tons/year - a 40% increase - to its steam cracker capacity, using propane feedstock shipped from the US, which will give the company an extra 400,000 metric tons/year each of polyethylene (PE) and polypropylene (PP) capacity by 2021. The Daesan operation has been a tremendous success, delivering cashflow of USD1 billion in 2018. "We are so happy with Daesan that we are evaluating new opportunities there, notably a new gas cracker, which will benefit from the platform’s synergies." The downstream product slate is still being developed.
Total is also happy with its operations in Saudi Arabia, where it is a partner with Saudi Aramco in Satorp (Jubail). Satorp, a 62.5/37.5 JV between Aramco and Total, currently includes a refinery and an aromatics complex, which started up in 2014. It has on average provided USD1 billion/year in cashflow since 2015. The 4,000 b/d refinery was debottlenecked by 10% in 2018 and the JV plans to increase the capacity to 4,800 b/d by 2024. "We now plan to further integrate with petrochemicals." Aramco and Total have announced plans to invest USD5.5 billion in a new petchems complex at the site, which will include a 1.5-million metric tons/year (MMt/y) steam cracker and a 1 MMt/y PE plant. The project is currently in the front-end engineering and design (FEED) phase and the final investment decision (FID) is due in 2021. Completion is targeted for 2024. This is a very attractive project and has already attracted downstream investors. Ineos will invest USD2 billion in specialty chemicals and Daelim is also a partner.
Referring to the US, Pinatel said that Total has very good assets there and a profitable base providing USD1 billion of cashflow last year. A JV in which Total has 50% and Nova and Borealis 50% is developing a 1 MMt/y ethane cracker. The project is 70% complete and will start up in 2021, post the first wave. "We are also investing in a new PE line by 2021, fully integrated with the cracker. Total brings integration and synergies with our platform, Borealis its Borstar technology and Nova its market presence. We are well on track to start up in 2021."
Total is also developing a USD1.4-billion propane dehydrogenation and PP complex at Arzew, Algeria, in partnership with Algeria’s state-owned oil company Sonatrach. The facilities will be designed to produce 600,000 metric tons/year each of propylene and PP. The project is in FEED phase with FID due in 2021.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polyprolypele (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,589,580 tonnes in the first nine months of 2019, up by 7% year on year. Shipments of all PE grades increased. The estimated PP consumption in the Russian market was 976,790 tonnes in January-September 2019, up by 4% year on year. Shipments of PP block copolymer and homopolymer PP increased.
Total S.A. is a French multinational oil and gas company and one of the six "Supermajor" oil companies in the world with business in Europe, the United States, the Middle East and Asia. The company's petrochemical products cover two main groups: base chemicals and the consumer polymers (polyethylene, polypropylene and polystyrene) that are derived from them.