Growth of petrochemicals boost naphtha demand

Growth of petrochemicals boost naphtha demand

SINGAPORE (Reuter): Asia's naphtha demand is expected to rise on the growth of the petrochemical sector and petrol use especially in Taiwan and India, despite reduced imports from Japan and South Korea, industry sources said yesterday.

"Naphtha demand is rising on increasing demand for petrochemical production, increased gasoline (petrol) demand and the move by refiners to produce cleaner burning fuels," said Duncan Seddon, director of Australia's Hindsford Pty Ltd.

Asia's naphtha demand is estimated to grow by 3.2 percent a year over the next 10 years, he said at a two-day naphtha conference organized by IBC Technical Services.

While there was enough naphtha to meet current needs, the spurt in demand would exhaust supplies despite increased gas output and the processing of crude oil, he said.

As more refineries processed heavier Middle-East crudes which have a lower naphtha yield, supplies of the product would also fall, he said. This would cause Asian naphtha prices to rise relative to the price of crudes like Malaysia's Tapis, he added.

Juang Po-Hsiung, manufacturing director of Taiwan's state Chinese Petroleum Corp (CPC), said, "Arising from the development of the petrochemical industry and liberalized import of cars, naphtha demand in Taiwan has been increasing about 46.2 percent, from 6.5 million kiloliters in 1990 to 9.5 million in 1995."

Taiwan's total naphtha demand after 2000 was estimated at 18 million kiloliters a year.

About 13 million kiloliters would be met by local refineries, up from the current naphtha output capacity of 6.8 million kiloliters. But imports would also rise to five million kiloliters a year from the current 2.7 million kiloliters, Juang said.

Fall

India, a long-time naphtha exporter, would become a net importer of around one million tons a year from 1997-1998 with the development of new gas and naphtha-based power plants and rapid growth of the petrochemical and fertilizer industries, said an official with India's Oil Coordination Committee.

But northeast Asia's naphtha imports were set to fall as Japan sought to diversify its feedstock for ethylene production, while South Korea's massive refining expansion would reduce its import dependency.

Japan, Asia's biggest naphtha consumer, imported 413,000 barrels per day (bpd) out of a total domestic naphtha consumption of 750,000 bpd in 1994, said Keiichi Yonemitsu, products supply manager with Nippon Oil Company.

Japanese petrochemical companies prefer naphtha because it was the most economical and stable feedstock supply, he said. But they would be forced to reduce the volume and portion of naphtha used as feedstock from 1996 as the government wants them to use more natural gas and liquefied petroleum gas.

This would lead to a four percent dip in Japan's naphtha imports, or 30,000 bpd, next year, he said.

Seung-Tae Yang, Korean refiner Yukong Ltd's product trading manager, said local refineries would supply over three million tons of naphtha a year by 1996, reducing the petrochemical companies' dependence on imports. Imports were expected to dip to six million tons in 1996 from over seven million this year.