APIC ’24: Global energy transition to impact chemical feedstocks availability – consultant

SEOUL (ICIS)–The effect of the global energy transition will extend beyond energy sources and become more pronounced after 2030 – impacting the availability of petrochemical feedstocks, a senior industry consultant said on Thursday.

“The energy transition is a very wide terminology, which actually goes well beyond energy and materials that will be used in the future,” Stefano Zehnder, vice president of consulting at ICIS, told delegates at the Asia Petrochemical Industry Conference (APIC) in Seoul, South Korea.

This shift, he explained, will significantly affect the types of materials used in the future and this has important implications for the refining industry.

“Oil demand alone does not describe the role of global refining,” Zehnder said.

Large-scale refining capacity rationalization is expected as refining operations become more exposed to fluctuations in fuel demand, he said.

“As refining operation will become more and more exposed to the fuel side, they will be increasingly targeting the petrochemical feedstock area,” Zehnder projects.

Zehnder also presented a longer-term scenario projecting a substantial reduction in oil demand post-2030, driven by the increasing penetration of sustainable fuels.

Despite the evolving energy landscape, “the refining industry remains the dominant provider of feedstock for the petrochemical industry”, he said.

“We don’t think is going to change much into the future.”

“Post 2030, longer-term scenarios will envisage an important reduction of oil demand, accelerating the trends visible in the medium term,” Zehnder added.

Although the reduction size in demand will be function of specific assumptions on the key drivers of fuel demand, the impact on “conventional” refiners is likely to be even more pronounced.

“This scenario implies a loss of 11 million barrels/day of crude processing. The main factor is [the] assumption related to sustainable fuels, with annual contributions from non-gas liquids (NGLs) gradually flattening.”

The shift away from fossil fuels to sustainable alternatives will also affect the production of petrochemical feedstocks that are traditionally derived from oil refining.

Zehnder highlighted that this transition could lead to a shift in the availability of key feedstocks such as naphtha and propylene.

Through to 2049, reducing refinery runs and gasoline yields will affect propylene availability from global refineries, Zehnder explained. “As FCC capacity will decline, higher propylene yields will be required.”

During the same period, Zehnder noted, “SAF technologies can contribute to renewable naphtha availability, with bio/renewable also potentially contributing to renewable naphtha availability, including bio/renewable diesel to bunkers.”

Focus article by Nurluqman Suratman