Oil and Petrochemicals

Oil and Petrochemicals Crude oil, or oil for short, is essentially a naturally occurring yellowish-black liquid mixture of hydrocarbons and is found in geological formations. The term oil encompasses both naturally occurring unrefined crude oil and petroleum products derived from refined crude oil. Petroleum, a fossil fuel, is typically formed by the burial of large quantities of dead organisms, primarily zooplankton and algae, beneath sedimentary rocks and exposure to prolonged heat and pressure. Oil is obtained primarily through oil drilling. Drilling is performed after studies in structural geology, sedimentary basin analysis, and reservoir characterization. Recent technological advances have also enabled the use of other unconventional reserves such as oil sands and oil shale. Once crude oil is extracted, it is refined and separated into numerous products for direct use or manufacturing, most readily through distillation. Oil is used in the production of a wide variety of materials essential to modern life, and it is estimated that approximately 100 million barrels (16 million cubic meters) are consumed daily worldwide. Oil production can be highly profitable and forms the primary revenue source for certain countries known as "oil states." The exploitation and use of oil has resulted in significant negative environmental and social consequences. The extraction, refining, and burning of oil fuels releases large quantities of greenhouse gases, making oil one of the materials that contributes most to climate change. Other negative environmental impacts include oil spills and air and water pollution. Some of these impacts have direct and indirect health consequences for humans. Despite global economies reducing their dependence on oil as part of mitigation of climate change and the transition to renewable energy and electrification, oil production is projected to peak before 2035.

Petrochemicals and Applications

Petrochemistry, in its narrowest sense, can be defined as any member of a large group of chemicals derived from oil and natural gas and used for various commercial purposes (distinct from fuels). However, the definition has been expanded to include aliphatic, aromatic, and naphthenic organic chemicals as well as inorganic materials such as carbon black, sulfur, and ammonia. Products made from petrochemicals include plastics, soaps and detergents, solvents, pharmaceuticals, fertilizers, pesticides, explosives, synthetic fibers and rubber, paints, epoxy resins, flooring and insulation materials. Petrochemicals are found in bags, boats, automobiles, aircraft, polyester clothing, record discs, and countless different products. Like crude oil and natural gas, petrochemicals are primarily composed of carbon and hydrogen and are called hydrocarbons. Molecules with only single bonds and containing the maximum amount of hydrogen are saturated hydrocarbons. An unsaturated hydrocarbon is a type of hydrocarbon with at least one double bond, triple bond, or ring in the carbon chain. Unsaturated hydrocarbons are preferred as petrochemical feedstocks because they are chemically more reactive and can be more easily converted into other petrochemicals. The term "feedstock" here refers to various petroleum by-products used in the production of other chemicals. Olefins, aromatics, and a third category containing synthesis gas and inorganics can all be categorized as petrochemical feedstocks. Ethylene, propylene, and butadiene are olefins with unsaturated straight-chain molecules. The petrochemical industry uses ethylene most frequently as a feedstock, a hydrocarbon. For example, from ethylene are produced ethylene glycol used in polyester fibers and resins and antifreeze, ethyl alcohol used as a solvent and chemical reactant, polyethylene used in films and plastics, styrene used in resins, synthetic rubber, plastics and polyesters, and ethylene dichloride used for vinyl chloride in plastics and fibers. Propylene is involved in the production of acrylic, rubbing alcohol, epoxy adhesives, and carpet. Butadiene is used in the production of synthetic rubber, carpet fibers, paper coatings, and plastic pipes.

The Future of Oil and Petrochemicals

According to the 2022 OPEC World Oil Outlook (WOO), the global economy is expected to more than double in size and the global population is expected to increase by 1.6 billion by 2045 from today. Global primary energy demand is projected to continue rising in the medium and long term, increasing by an important rate of 23% over the period through 2045. The world will need to add an average of 2.7 million barrels per day of oil equivalent by 2045. Multiple forms of energy will be needed to meet future energy requirements. Energy poverty will remain a problem throughout the forecast period, with a wide gap continuing between developed and developing countries. Oil is projected to constitute the largest portion of the energy mix by 2045 with approximately a 29% share. Other renewable energy, primarily combining solar, wind, and geothermal energy, has an average annual growth rate of 7.1%, well above that of all other energy sources. All major fuel types except coal are expanding. Global oil demand is projected to increase from 97 million barrels per day (mb/d) in 2021 to approximately 110 million barrels per day by 2045. Robust medium and long-term refinery capacity growth in the Asia-Pacific, Middle East, and Africa is being offset in part by declines in developed regions. Strong demand growth is expected to lead to a tighter medium-term submarket compared to 2021. The global oil sector, equivalent to over USD 500 billion annually, will require cumulative investment of USD 12.1 trillion through 2045 for the industry's exploration and production, transmission, and processing activities. Recent investment levels remained significantly below this due to industry downturns, the pandemic, and increasing focus on environmental, social, and governance (ESG) issues. According to the forecast, crude oil and condensate flows between the Middle East and Asia-Pacific will remain the most significant oil trade link, with volumes rising from below 13.5 million barrels per day in 2021 to 19.5 million barrels per day by 2045. The Asia-Pacific region is expected to remain the most important crude oil importing region throughout the forecast period, with imports increasing by 7.5 million per day. While technological advances are expected to shape the global energy landscape, public policies regarding energy demand and supply are expected to tighten throughout the forecast period.

Compilation and Translation: B. Serhat Cengiz

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