What is Egypt doing to greenify its petrochemicals industry? Betweensetting up a large number of green petrochemical plants and boosting investments in the sector, Egypt has been working overtime to ensure its petrochemical sector is catching up to the global and nationwide green transition.

First things first, what are petrochemicals? In the simplest terms, petrochemicals arechemical products derived from petroleum. The petrochemical industry is currently one of the world’s most important, with petrochemicals being used in the production of a variety of different things — plastics, medical equipment, tires, packaging, clothing, solar panels, and batteries to name a few. The petrochemicals market is currently valued at around USD 585 bn and is expected to almost double to USD 1 tn by 2030.

More demand means more oil consumption: Petrochemicals will account for more than athird of the growth in oil demand by 2030 and nearly half by 2050, according to an International Energy Agency (IEA) report. “The chemical sector is the largest industrial energy consumer and the third largest industry subsector in terms of direct CO2 emissions,” the IAE writes.

A step in the right direction: The growing global interest in reaching net zero emissions andtransitioning to green energy has spilled over into the petrochemicals sector, encouraging the development of sustainable petrochemicals — like through chemical recycling a process where used plastic is broken down into raw materials. “Over recent years, traditional petrochemical companies have been announcing sizable investments into research and production of [bioplastics],” S&P Global wrote, pointing to the annual 1.4 mn tons of chemical recycling capacity that is expected to come online by 2025.

Egypt has benefited from the global demand for petrochemicals, with the volume of exportsexpected to reach USD 9 bn soon, with plastic exports making up around 15% of that figure, head of the Chemical and Fertilizers Export Council Khaled Aboul Makarem told Enterprise. Petrochemical exports were up around 23% y-o-y in 2022 to USD 8.6 bn.

How much is Egypt producing? The country produced some 4.3 mn tons of petrochemicalsduring the fiscal year 2021-22, according to recent figures — more than half the 2.1 mn tons produced in the fiscal year 2015-16. The sector makes up around 3% of the country’s GDP.

Big plans ahead: There is considerable investment momentum for the industry, sources at theHolding Company for Chemical Industries told Enterprise, with plans to raise production capabilities and create a surplus earmarked for exports in light of the growing global demand for petrochemical products. The plan aims to increase Egypt’s production of fertilizers to 2 mn tons a year, compared to current volumes of 550k tons — the surplus will be directed towards exports — and look at green energy sources in light of the various international agreements and legislations recently put forward to reduce emissions.

What is Egypt doing to make its petrochemical industry greener? As part of a nationwidegreen push, the government is investing USD 1.2 bn in environmentally friendly petrochemical projects that will reduce emission by 2.1 mn tons a year.

SO WHAT’S IN STORE?

The state has a number of green petrochemical projects in the pipeline, among the mostnotable are:

#1- Polylactic acid plant: Preliminary studies are underway for a USD 600 mn polylactic acid— a resource deprived from renewable and organic sources and used to prepare and process plastics — plant that will have a production capacity of 75k tons a year. The plant will rely on agricultural waste and raw sugar for its production and it is expected to kick off operations in 2026.

#2- Damietta Port bioethanol plant: The Egyptian Bioethanol Company (EBC) will carry out aUSD 112 mn project to use molasses produced by local sugar companies to produce 100k tons of bioethanol annually — a versatile product used in paints, disinfectants, and pharma products, among many others — in order to meet domestic market needs and export the surplus. Operations are planned to kick off this year.

#3- From rice straw to wood: The Egyptian Petrochemicals Holding Company (ECHEM) willestablish a EUR 284 mn factory manufacturing 205k cubic meters of medium-density fibreboard (MDF) from rice straw a year in Beheira Governorate’s Idku. The volumes will meet local needs and replace imports in addition to reducing pollution resulting from the burning of rice straw. The project will be carried out in coordination with the Egyptian General Petroleum Corporation, Petrojet and Sidi Kerir Petrochemicals Company (Sidpec).

#4- Algae oil production: ECHEM signed an MoU with the UAE’s Rega Energy to producealgae oil, a feedstock for bio-jet fuel and green naphtha, which can be used to make environmentally-friendly petrochem products, in Egypt’s New Alamein City.

The state also has a number of not-so-green petrochemical projects in the making, like:

#1- Red Sea petrochemical complex: A USD 11.5 bn project in the Suez Canal EconomicZone that aims to produce 3.5 mn tons of petrochemical and petroleum products a year.

#2- Petrochemical refining complex in New Alamein: Egypt’s New Alamein complex willhouse several projects worth a combined USD 13.9 bn, including a petrochemical refining plant that would produce 3.9 mn tons a year of petrochemical products in addition to 1k tons of petroleum products per year from 4 mn tons of crude oil. The complex will also include a soda ash plant with a capacity of 600k tons per year.

We also have many projects in the pipeline that will work to serve the greenpetrochemical industry, like Norwegian renewable energy developer Scatec’s green ammonia project and the ammonium nitrate fertilizer production project — North Abu Qir Agricultural Nutrients Company — which was initiated in May last year.

Like all else, the sector has been hit by current economic woes: Ongoing FX pressures andgas shortages have impacted the petrochemical sector’s production and exports, Federation of Egyptian Industries official Sherif El Gabaly told Enterprise. The sector will resume its path to growth once producers have better access to hard currency and better access to raw material.

Your top green economy stories for the week:

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