Global Processing

Delays in Asian coal-to-chemicals plants give oil-based facilities chance to profit

January 15, 2014

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Although coal is still the dominant force on the Chinese energy market, there is an opportunity for crude-oil-based chemical plants to take off over the next three years, according to the South China Morning Post. Their progress will be facilitated by limited new capacity and delays in projects that will fuel chemical plants with coal.

The balance of power is set to be shifted once again after 2017, however, experts believe. That's when U.S. chemical plants, fueled by cheap domestic natural gas, will be able to export production at the huge competitive advantage of significantly lower prices, analysts claim. This means that Asian producers are left with a very short period of time in which they can take advantage of the market conditions and increase their profitability.

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According to Por Yong-liang, head of Asia energy research at BNP Paribas, delays of coal-to-chemicals plants across Asia may be even more serious than projected. BNP Paribas examined 15 projects that were due to be operational between 2015 and 2017 and found that just six were on track to be completed as scheduled. Of the remaining nine, five were delayed between three and nine months and four would face delays of one year or even two.

The main problems that these projects face include delays in construction of transportation and utility infrastructure, water shortages and delays in approvals for land use and infrastructure, the research from BNP Paribas found.