Dallas, TX -- (SBWIRE) -- 12/05/2011 -- Slowing economic growth could mean a stagnation in Algerian petrochemicals imports in 2012, while capacity expansion over the medium-term will make the country more self-sufficient, according to BMI’s latest Algeria Petrochemicals Report.

The economy will experience marginal growth rates over the medium term and we project real GDP to expand 4.7% and 3.6% year-on-year in 2011 and 2012 respectively. While fixed investment and government spending will expand in tandem with a rise in hydrocarbon revenues, we foresee only moderate growth in private consumption. This will limit demand for plastic products, particularly in packaging applications. As such, Algeria is unlikely to be an export growth market for Middle Eastern and European producers hoping to use the North African market to offset diminishing demand growth in home markets. Nevertheless, the Algerian petrochemicals industry is narrowly focused with a low level of capacity and the country will remain dependent on imports. The country's massive import needs will cause net exports to shrink precipitously over the coming quarters. As a result, while we foresee steady growth in hydrocarbon revenues going forward, we believe the economy overall will experience only moderate rates of growth through 2015.

The start-up of the 1mn tpa methanol complex planned by Sonatrach and being built by a consortium of companies led by Kuwait’s Qurain Petrochemical Industries Company (QPIC) has been pushed back to 2014. Sonatrach had planned to begin commercial operations in 2012, but restructuring of the company and its apparent desire to renegotiate its contract with its exasperated partners means that production will be delayed. As a result, costs could rise and BMI believes there is a danger that the project’s capacities could be reduced.

The move comes after the completion of the Arzew petrochemicals complex was delayed until 2014, ostensibly to coincide with a full recovery in the European market and avoid the negative effects of the massive increase in Asian and Middle Eastern capacities in 2009-2011. By tapping into locally available gas resources, the country’s development of an ethane-fed petrochemicals chain will enable Entreprise Nationale de l’Industrie Petrochimique (ENIP), in its JV with Total Petrochemicals and Qatar Petroleum, to undercut European plants. With 1.1mn tpa of ethylene production capacity and integrated downstream plants and low labour costs, the US$3bn petrochemical complex being built at Arzew should be more economic and efficient to run than smaller and often isolated European facilities.

Algeria’s ethylene and PE capacities are forecast to remain static until 2014, after which they will increase with the addition of new capacity. By 2016, ethylene capacity should be 1.23mn tpa and PE capacity should reach 878,000tpa, with new capacity in the production of other derivatives. Methanol production capacity will increase by 1mn tpa to 1.12mn tpa with the expected completion of a plant by Sonatrach and new fertiliser plants should lead to ammonia and urea capacities of 5.59mn tpa and 3.59mn tpa respectively.

In the Middle East and Africa Petrochemicals Business Environment Ratings, Algeria is in 10th place with an overall score of 39.4 points, 0.1 point down on the previous quarter due to a decline in its country risk score. It lies 7.7 points behind Egypt and 8.6 points ahead of Nigeria. Meanwhile, its petrochemicals specific scores are benefitting from progress on the Arzew petrochemicals complex, although delays are undermining the country’s petrochemicals market risk score. On nearly every indicator, Algeria comes last by a long margin, except when Nigeria scores worse, and this is likely to remain the situation until the Arzew complex comes onstream.

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Releated Report :

Azerbaijan Petrochemicals Report Q4 2011
http://www.marketreportsonline.com/125583-azerbaijan-petroc.html

China Petrochemicals Report Q4 2011
http://www.marketreportsonline.com/125595-china-petrochemic.html

France Petrochemicals Report Q4 2011
http://www.marketreportsonline.com/125603-france-petrochemi.html

Germany Petrochemicals Report Q4 2011
http://www.marketreportsonline.com/125605-germany-petrochem.html

Algeria Petrochemicals Report Q1 2012
http://www.marketreportsonline.com/139361-algeria-petrochem.html

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