By
STCIC
The
Trinidad Guardian
Port
Spain
Petroleumworld.com
03 19 06
T&T
is once more diversifying its natural gas industry—this
time into polyethylene and polypropylene.
Plans for
the US$1.4 billion polypropylene plant were announced in the
budget address last October with operations expected to begin
in 2010.
It has long
been debated as to what is the best use to which our natural
gas asset should be put. In this regard there is always consensus
that the country should have a diversified portfolio of natural
gas-based industries.
The present
concern is that a disproportionate amount of natural gas (61
per cent) is monetised as LNG. With the remaining 39 per cent
going mainly to methanol, ammonia, power generation.
It is widely
accepted that the development of a sustainable T&T economy
must be based on a robust and globally competitive manufacturing
sector. While this has been the intention of successive governments
it may well be that insufficient thought has been given to using
the energy sector to leverage growth in the manufacturing sector.
The diversification
of gas usage to include plastics manufacturing therefore makes
good sense from the point of view of creating an internal linkage
between the energy and manufacturing sectors.
At present,
this linkage between these sectors is weak, except for the fact
that a small percentage (less than one per cent) of natural
gas production is used in the light manufacturing sector while
T&T manufacturers enjoy comparatively lower electricity
rates than other countries in the region.
The absence
of strong linkages between the energy sector and other sectors
of the economy is often seen as an inherent weakness in our
economy. It is noteworthy too that the proposed Alutrint smelter
and the Essar steel complex will present a similar opportunity
to strengthen the link between energy and manufacturing.
T&T’s
incursion into plastics comes at a time when global demand for
the commodity is high and is expected to stay that way in the
medium term. Polypropylene is used in approximately one-third
of all the plastics used in automobiles.
It is estimated
that the average vehicle uses 30 kg of polypropylene with this
figure estimated to increase over time given the trend towards
lighter vehicles.
The rationale
for the establishment of a plastics industry in T&T is supported
by the fact that global demand for polyethylene is expected
to grow by seven per cent per annum with demand outstripping
supply by 1.5 million tonnes per annum. Given these demand parameters,
it is estimated that 50 new plants will be needed by 2015.
In the case
of polypropylene the demand will increase by eight per cent
per annum and in the process outstrip supply. The major producers
of plastics include some of the largest companies in the world
such as Dow, DuPont, Nova Chemicals, BASF and Shell.
According
to research published by Tidco, as of 2002 there were 330 companies
involved in the plastics, printing and packaging sector in T&T.
These companies collectively employ some 11,000 people. The
products they manufacture include plastic bags, PVC pipes and
water tanks. It is estimated that in excess of 65,000 tonnes
of resin is imported to meet local demand per annum.
Most of
this resin is imported from the USA while manufactured products
are sold to the local market, Caricom and the extraregional
market. In terms of demand for polypropylene, it is estimated
that the T&T market uses 26,000 tons of polypropylene per
year while the Caricom market consumes 150,000 tons per annum.
Plans for
a polyethylene complex have been mentioned in budget speeches
going back as far as 1993.
The feedstock
for polyethylene is ethane. In the past, one of the constraints
for a polyethylene complex in T&T was the insufficient volumes
of ethane (the feedstock for polyethylene). T&T’s
natural gas contains approximately three per cent ethane.
With natural
gas production now approaching 3.8 billion cubic feet of gas
and with ALNG Train IV operational, the requisite volume of
ethane is now available for the complex.
The amount
of ethane available for the polyethylene complex is 52,000 barrels
per day of which 28,000 bpd would come from NGC and 24,000 bpd
from ALNG. This would roughly translate into a plant with a
capacity of 800,000 to one million tonnes of polyethylene per
annum.
With regard
to polypropylene, the company behind the proposed project in
T&T is Basell (a combination of BASF and Shell). Basell
is the number one manufacturer of polypropylene in the world.
The polypropylene
plant proposed for the country would produce 450,000 tonnes
per year and would more than supply the demand from the local
market. The process would involve converting methanol into polypropylene.
In T&T it was considered economically unfeasible to use
propane from PPGPL as a feedstock for polypropylene since it
fetches a better price as LPG.
The production
of polyethylene and polypropylene in the country presents an
opportunity for local manufactures in the plastics, printing
and packaging sector to source resins locally rather than having
to have it imported.
The advantage
would of course only be realised if the resin is competitively
priced. The local plastics, printing and packaging sector must
itself be prepared to take full advantage of this opportunity.
Many of
the existing companies involved in the plastics, printing and
packaging sector are small and medium enterprise family-type
operations.
The development
of a competitive plastics, printing and packaging sector may
require mergers between companies and upgrade of skills, plant
and equipment.
The one
major drawback of the further development of a plastics industry
in T&T is the potential impact on the environment.
At the level
of global environmental impacts the substitution of plastics
for other materials in the transport sector is seen as playing
a positive contribution to greenhouse gas emissions, as lighted
vehicles translate into greater fuel efficiency.
At the local
level, the proliferation of plastic is not good for the environment.
One only has to look around the country to recognise that a
problem exists in T&T with the improper and indiscriminate
disposal of plastic containers.
Mention
was made of the Beverage Containers Bill in the 2005/2006 budget
but, to date, there has been no further word on it. This is
an initiative that should be advanced as the industry develops
in order to negate the adverse environmental impacts.
Another
initiative that should be advanced is the further investment
in related R&D.
The University
of the West Indies, Department of Chemistry has, for several
years, been conducting research into polymers. A renewed plastics
industry with a local source of production would be well complimented
by this already existing body of knowledge.
South Trinidad Chamber of Industry and Commerce
