Crude oil has been the primary source for producing transportation fuel for decades. But in today’s changing and competitive market conditions, it is important for organizations to consider crude oil-to-chemicals (COTC) technology, which allows conversion of crude oil to valuable chemical products instead of conventional transportation fuels.

The world market for primary products, such as gasoline, diesel and jet fuel, has observed a flat to slow growth of around 0.7% to 0.9% annually. According to India Energy Outlook's special report, India is the third-largest energy consumer in the world and its energy demand is poised to grow at an average annual rate of more than 3% until 2045 as compared to the less than 1% growth rate for the world’s primary energy demand during the same period. According to Petroleum Planning & Analysis Cell, consumption of petroproducts has reached 215 million tons, which is a 10% increase than the 196 million tons originally predicted for 2020-21. This is due to the impacts of traditional fuel replacement such as methanol, ethanol and liquefied natural gas, a steady increase in the electrification of the transportation fleet and constant advocacy for improving global fuel efficiency standards, such as Bharat Stage Emission Standards (BS) VI, which came into effect India in April 2020.

Petrochemical Consumption

Items such as clothes, food packaging, automobiles and more contain petrochemical products, and consumption of petrochemicals is highest in the developed countries of the world.

As the large populations of China and India begin to enter the middle class, they will likely start consuming more petrochemical-based products and the demand for petrochemical products will increase substantially, possibly overshadowing the consumption currently experienced in developed countries.

As an emerging hub for petrochemicals consumption, India is estimated to contribute more than 10% of the incremental global growth in petrochemicals in next 10 years. Additionally, considering the significant reliance on imports, India could require more than 15 world-scale petrochemical assets by 2035 to meet the growing domestic demand.

As consumption in India, China, Africa and other developing parts of the world reaches the levels of consumption in North America and Western Europe, they could become the largest consumers of petrochemical products considering the size of their populations.

Meeting an Increase in Demand

Petrochemicals, which are broken up into olefins or aromatics, can be created in a variety of ways. Most commonly, olefins and aromatics are produced via fluid catalytic cracking or steam cracking at oil refineries or chemical plants. Unfortunately, these processes don't always create the heaviest or strongest petrochemical products.

Unlike in ordinary oil refineries or chemical plants, primary petrochemical products and heavier petrochemical products can be produced with the molecular optimization of a COTC refinery, creating full market coverage, product and revenue divergence and reduced market risk.

Building and Evaluating COTC Refineries

Ideally, a new COTC refinery would be built where crude oil is in abundance and closer to regions with highest demand growth. This includes the Middle East and Asia, including Southeast Asia. But before committing to the development of a COTC refinery, an owner or organization should consider performing a proper development process, which would help identify the right COTC configuration to fit its business plan and market needs.

Typically, there are several processes involved in converting oil fractions into petrochemical products. But with the use and proper configuration of a COTC refinery, these processes are streamlined, reducing the number of steps needed for oil-to-petrochemical conversion, which also reduces capital and operational expenditure.

An experienced engineering firm can partner with an owner or organization to help configure and determine necessary steps to maximize the rate of return on a new COTC facility. Because net present value can be somewhat misleading when options of varying capital spend are compared, rate of return or profitability index are used to measure or rank configurations.

The oil and gas market continues to be extremely competitive because almost all finished products are interchangeable, and there are usually minute differences in product or quality. Additionally, these products are often easily transported around the world, meaning that organizations that exhibit competitive advantages in certain geographical areas can reach high levels of growth in other locations as well. To stay competitive, owners and organizations should continue to consider a variety of new production or refinery opportunities.

From optimizing the balance between product production and proper process configuration to partnering with an experienced team with market knowledge, owners and organizations can benefit from increased opportunities and competitive advantage in the petrochemical industry.


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Anagha Dalal is a chief process engineer at Burns & McDonnell India. She specializes in process and systems engineering and has extensive experience working on various project phases, such as concept/pre-feed, feed, detailed engineering and EPC.