Petrochemicals party is on but Nigeria finds no seat

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, fertilizers, 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 October 05.

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.”

Nigeria built three petrochemical plants in Eleme, Warri and Kaduna. These plants have combined capacity to produce 240,000 metric tons of polyethylene; 130,000 metric tons of polypropylene; and 18,000 metric tons 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 per cent, having newly-built largest single-train fertilizer 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” Emmanuel Anyaeto, director/chief executive officer of California-based Integrated Gas and Energy Services, LLC said 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