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Nigeria And Future Of Petrochemicals Industry

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A recent research publication by the International Energy Association (IEA) revealed that the global economies are heavily dependent on petrochemicals. FESTUS OKOROMADU writes on need for Nigeria to turn its attention to the sector as the true recipe for economic diversification.

The global community appears to be traveling on a fast track in terms of the use of research documents to advance economic development, growth and prosperity. There is therefore no doubt that only those who take advantage of the knowledge driven economy that can advance. Compelled by the quest to stay on top of the knowledge economy especially in the energy sector, the International Energy Agency (IEA) is currently researching on what it called, energy blind spots.The term ‘blind spots,’ is better understood by the fact that the agency further described the scope as ‘major areas of energy demand which fail to attract the level of attention from policy makers that they deserve.’Indeed no country can be said to be more guilty of this fact than Nigeria where policy makers and industry stakeholders appear to be overwhelmed with the crisis facing the oil and gas sector, that the petrochemicals sub-sector has disappeared from the discussion table. For instance, the foremost policy framework of the ministry of petroleum resources called the 7 Big Wins, has no mention of the petrochemicals industry as item 4 of the policy initiative which should have recognised the sector failed to do so. For emphasis sake, Big Win 4 which should have incorporated the petrochemicals industry is focusing on refinery and local production capacity. Similarly, the Nigerian National Petroleum Corporation (NNPC) merely paid what can best be described as lip service to the sector even in its website. A visit to the corporation’s website showed that the focus remains on refineries even though they remain moribund.  By implication the country’s policy makers and operators of nation’s oil and gas industry have refused to see the inherent potentials in developing the petrochemical industry and using it as a propeller to launch Nigeria into industrial development.
The Role of Petrochemicals In Stimulating Economic Growth

According to IEA, the study titled: “The Future of Petrochemicals,” was designed to explores the role of the sector in today’s global energy system and how its significance for global energy security and the environment is set to increase. The study revealed that petrochemicals are set to account for more than a third of the growth in world oil demand by 2030, and nearly half the growth by 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. Highlighting economic value of this singular industry to any economy, the executive director, International Atomic Energy Dr Fatih Birol, said petrochemicals are particularly important given how prevalent they are in everyday products. They are also required to manufacture many parts of the modern energy system, including solar panels, wind turbines, batteries, thermal insulation and electric vehicles. “Our economies are heavily dependent on petrochemicals, but the sector receives far less attention than it deserves. “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,” he said. Demand for plastics, according to the study remains the key driver for petrochemicals from an energy perspective, adding that it 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, the report stated. Meanwhile the dynamism of the petrochemical industry is said to be driving new trends around the world. For instance, the United States is said to have re-emerged as a low-cost location for chemicals production, after decades of stagnation and decline, thanks to the shale gas revolution.

The US is reported to now be home to around 40 per cent of the global ethane-based petrochemical production capacity. This is even as the Middle East remains the lowest‑cost centre for many key petrochemicals, with a host of new projects announced across the region.

Environmental Challenges.

As rightly noted by the IEA report, petrochemical products provide substantial benefits to society, including a growing number of applications in various cutting-edge, clean technologies critical to sustainable energy systems.  However, the production, use and disposal of petrochemical-derived products present a variety of climate, air quality and water pollution challenges that need to be addressed.  While substantial increases in recycling and efforts to curb single-use plastics are underway, especially in Europe, Japan and Korea, the impact these efforts can have on demand for petrochemicals is far outweighed by sharply increasing plastic consumption in emerging economies.

Resolving The Challenges
To address these challenges, the report outlines a Clean Technology Scenario (CTS), which provides an alternative future in line with key UN sustainable development goals, such as climate action, responsible consumption and life below water, among others.
The scenario provides an ambitious but achievable pathway to reduce the environmental impacts of petrochemicals: air pollutants from primary chemicals production decline by almost 90 per cent by 2050.
In the CTS, petrochemicals become the only growing segment of global oil demand. Despite near-tripling in plastic waste collection by 2050, the limited availability of cost-effective substitutes for oil feedstock means that oil demand for petrochemicals remains resilient.

Why Nigeria Must Hurry Up
According to the IEA report, oil companies are increasingly pursuing integration along the petrochemical value chain.
Against a backdrop of slower gasoline demand growth, robust growth prospects for chemical products, and attractive margins, oil companies are further strengthening their links with petrochemical markets.
The report explained that the new direct crude-oil-to-chemicals process routes may also come into play, offering alternatives to traditional refining/petrochemical operations although the technology remains challenging for now. For example, Saudi Aramco and SABIC had recently announced a large crude-to-chemicals project of 0.4 mb/d, five times the size of the only existing facility in Singapore.
In summary, the IEA’s Future of Petrochemicals report couldn’t have come at a better time than now bearing in mind the current quest for diversification of Nigeria’s economy.



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