As the world strives to wean itself off fossil fuels, oil companies have been turning to plastic as the key to their future. Now even that is looking overly optimistic.The global crackdown on plastic trash threatens to take a big chunk out of demand growth just as oil companies such as Saudi Aramco sink billions into plastic and chemicals assets. Royal Dutch Shell Plc, BP Plc, Total SA and Exxon Mobil Corp. are all ramping up investments in the sector.
Demand for gasoline is flatlining as electric vehicle sales grow and conventional cars become more efficient. But oil is essential for much more than just transportation: It’s broken down into chemicals and plastics used in every aspect of modern life. Growth in demand for chemicals already outstrips the need for liquid fuels, and that gap will widen in coming decades, according to the International Energy Agency.
Projects by companies including Hengli Petrochemical Co. and Rongsheng Petrochemical Co. will devote as much as half their capacity to chemicals, mostly paraxylene, a material that China imports to make polyester and plastic bottles. That’s a sharp increase from the 10 per cent chemical production at a typical refinery and as much as 20 per cent at modern refineries integrated with chemical plants.
Saudi Aramco, with Chevron Lummus Global and CB&I, is planning a refinery with 70 per cent to 80 per cent of its output in chemicals. That could double the profitability from a barrel of oil, IHS Markit estimates. It’s building another refinery in Saudi Arabia with 40 per cent of its production dedicated to chemicals, as well as adding chemical capacity to another Texas plant.
If memory serves, it was either Isaac Asimov or Arthur C. Clarke who once wrote that of all the things that could be done with oil, the stupidest is to burn it. Perhaps throwing it away (and fouling the oceans) in the form of single use plastics is the second stupidest?
Self-inflicted.
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