In the past two decades, oil’s percentage share of the global energy mix has fallen from about 40 percent of the energy consumed to 33 per cent, although the consumption volume increased with more and more cars on the roads, increasing air travel and a booming petrochemical industry
that produces ever more plastics and other products. However, this may change now owing to the production of electric vehicles
being rolled out of factories. Also, while the airline industry struggles to recover from the pandemic, the International Air Transport Association (IATA) has stated that it does not expect air travel to reach 2019 levels until 2023.
The petrochemicals market
comprises the sale of petrochemicals by various entities such as organizations, sole proprietors, and partnerships that manufacture acyclic hydrocarbons that include ethylene, propylene, and butylenes made from refined petroleum
or liquid hydrocarbons or produce cyclic aromatic hydrocarbons such as benzene, toluene, styrene, etc. that are manufactured from refined petroleum or liquid hydrocarbons.
Petrochemicals are also called petroleum distillates. These are chemical products obtained from its base product - petroleum. Some of the similar chemical compounds such as petrochemicals are also derived from other fossil fuels. And, these include coal or natural gas, or renewable sources such as corn or sugar cane. However, these are not part of the petrochemicals industry.
Expected Rebound of Growth
In the year 2019, the global petrochemicals market reached a value of approximately USD 456.5 billion, registering a CAGR of 3.7 percent since 2015. According to recent reports, the petrochemical market growth declined in the year 2020 at a CAGR of -4.9 percent. This decline is mainly due to the lockdown and social distancing norms that were imposed by countries across the globe as measures to contain the pandemic and also economic slowdown owing to the COVID-19 outbreak. However, the market is anticipated to reach USD 431.01 in 2023 at a CAGR of 0.01 percent from USD 430. 96 billion in 2021 and by 2025, the market is anticipated to stabilize and reach USD 453.6 billion and USD 506.1 billion in 2030.
Increasing demand for polypropylene and synthetic materials are anticipated to drive the market growth. However, factors that would be responsible for hindering the growth of the petrochemicals market in the future would be a reduction in free trade, environmental concerns, COVID-19, and oil price wars.
Polypropylene - a preferred material for manufacturing automotive parts
The surge in demand for polypropylene is anticipated to contribute to the growth of the petrochemicals market in the near future. What makes polypropylene a preferred material to be used in manufacturing several products such as automotive parts are the superior mechanical properties and moldability.
Furthermore, polypropylene is also used as an insulating material for high voltage cables, and in the interior parts of vehicles. According to research, about 30 percent of all vehicle sales will be from the electric vehicles and hybrid electric vehicles industry by 2025 and this is due to the increasing demand for e-vehicles. Thereby, this is anticipated to boost the demand for polypropylene, which in turn will drive the market for petrochemicals during the forecast period.
Controlling the production process using Automation and instrumentation solutions
Automation and instrumentation solutions are being largely used by Petrochemical manufacturers to control the production process more effectively and efficiently.
Control valves, temperature transmitters, and pressure transmitters are the various types of automation instruments that help to improve an organization’s operational efficiency. For instance, Siemen's process instrumentation and gas analytics solutions increase productivity and efficiency during plant operations.
The segment that is expected to receive top opportunities in the petrochemicals market by type is the ethylene segment. This is predicted to gain USD 3 billion of global annual sales by the end of 2023. Based on the end-user industry, the top opportunities in the petrochemicals market are anticipated to arise in the pharmaceuticals segment and this will gain USD 6.3 billion of global annual sales by the end of 2023.
Implementation of digital and advanced analytics
Some of the market trend-based strategies for petrochemicals comprise organizations investing in automation and instrumentation services. Furthermore, it also includes investing in developing on-purpose propylene technologies, implementing AI in operations etc.
To make use of the opportunities in this particular landscape, the business research company suggests the petrochemicals manufacturing companies use and leverage digital and advanced analytics, with a major focus on developing crude oil to chemical technologies.
The segment that is expected to receive top opportunities in the petrochemicals market by type is the ethylene segment.
Based on the type, the petrochemical market can be classified into ethylene, propylene, benzene, xylene, styrene, toluene, cumene, etc. Of these the benzene market was the largest segment based on type, accounting for 21.9 percent of the total in 2019. Moving ahead, the ethylene segment is anticipated to be the fastest-growing segment, at a Compound Annual Growth Rate of 0.7 percent.
Based on the end-user market, the petrochemical market is segmented into textile, furniture, paints & coatings, pharmaceuticals, synthetic rubber and fibers, plastic materials and resins, toiletries and cleaning compounds, and others. Based on geography, the petrochemical market is divided into North America, Western Europe, Asia Pacific, Eastern Europe, South America, Middle East, and Africa.
Expansion of gas infrastructure in India
“The government is not considering any proposal to bifurcate state-owned gas utility GAIL India Ltd., and the company is focused on building pipelines to connect gas sources to consumers to accelerate gas usage,” Oil Minister Dharmendra Pradhan said on March 15, 2021.
GAIL – the country’s biggest natural gas marketing & trading organization owns 60 percent of India’s gas pipeline network. Intending to resolve the conflict of a transporter also being the marketer, it was proposed that GAIL’s pipeline business should be made a separate entity. But the proposal has been dropped for now.
“There is no such proposal under consideration at present,” Pradhan said in a written reply to a question in the Lok Sabha on bifurcation of GAIL. He said the share of natural gas in India’s primary energy basket is the target to be increased to 15 percent by 2030 from the current 6.3 percent. For this, the government is promoting the expansion of natural gas infrastructure – pipelines, LNG import terminals, and city gas distribution networks. “GAIL is executing projects related to the expansion of gas infrastructure in the country,” he added.
In February 2021 PTI had reported that the plan to bifurcate GAIL has been dropped to raise funds for the projects by enabling the strength of a combined balance sheet. The actual plan was to transfer the pipeline business into a subsidiary and for GAIL to own the core business of petrochemical production and marketing natural gas.
“GAIL is majorly implementing Jagdishpur-Haldia-Bokaro-Dhamra pipeline (JHBDPL) with Barauni-Guwahati Pipeline in the state of Uttar Pradesh, Bihar, Jharkhand, Odisha, West Bengal, Assam and Kochi-Kootand-Bangaluru-Mangalore Pipeline (KKBMPL) in the state of Kerala, Tamil Nadu, and Karnataka,” Pradhan explained.
GAIL, he said, has taken up a company-wide cost optimization drive to bring down the cost and improve operational efficiency as well as digitization to enhance profitability.
“In the push towards a gas-based economy, the government has taken major steps including allowing fair price discovery through e-bidding platforms and gas trading exchanges. Also, the production of gas has been sought to be increased by the introduction of open acreage licensing policy and auction of discovered fields,” added Pradhan.
With the move towards sustainability, the petrochemical industry is expected to undergo several mutations in terms of usage and the combination of alternatives. Although there is a long road ahead, the journey must begin now to achieve sustenance and self-reliance.