RPME meets with the owner of a new expandable polystyrene plant in Qatar to discuss how petrochemicals can tap into the need for energy efficiency in the construction boom
The GCC’s major cities are riddled with construction sites, indicative of the resurgence in economic activity throughout the region. There are estimates that government-led construction projects alone will drive an estimated $898 billion spending boom in the building sector across the GCC by 2020.
But the region’s call for energy efficiency is still in its infancy. In such a resource-rich region, consumption patterns continue to buck international trends. The need to provide more effective energy solutions could not be greater than in the construction of residential projects.
With household energy consumption accounting for such a large portion of the region’s demand, it’s only a matter of time that more investors look towards filling the need for energy efficient solutions.
It is here that the GCC’s petrochemicals industry can provide innovative solutions to help solve the region’s economic challenges.
One such solution, is expandable polystyrene (EPS).
The product is a rigid cellular form of polystyrene that can act as a thermal insulator and shock absorber, thanks to its high compressive strength, low weight and resistance to moisture. Expandabed polystyrene, the downstream product of EPS is used primarily for building and construction; and for packaging.
“It is often used in insulated blocks across throughout the GCC region, it’s pretty prevalent in a lot of building,” says Thom Bohlen, chief technology officer at the Middle East Centre for Sustainable Development.
So it’s no surprise that one savvy investor has made the jump to develop the region’s largest privately owned EPS plant. In February of 2014, EPS Qatar signed a technology licensing agreement with INEOS, a Swiss-based chemicals company that developed the INEOS One Step EPS Suspension process.
Not only will the move accelerate Qatar’s economic diversification, but it will also create also shows that the country’s private investment sector is growing.
“Expanded polystyrene is a very important product for the GCC and MENA region’s future and it was a good time to make an investment into this market,” says Hitmi Bin Ali Khalifa Al Hitmi, owner of EPS Qatar.
Considering the projected growth in construction projects, and the need to provide energy efficient housing for the region’s growing population, Al Hitmi’s project comes at a perfect time.
“This is crucial, especially in the construction of more energy efficient buildings. All the governments are expecting that demand for expanded polystyrene is going to be very high in the next five years,” he says.
Al Hitmi’s view of the market is one shared by many who are familiar with the construction sector and the need for the GCC to more effectively manage its energy patterns.
“When we look into the market, we see that the GCC has a deficit in construction compared with the population patterns, In addition to that, the feedstock, monomer styrene, for the EPS product are readily available in the GCC and mostly will be available in Qatar.
So the market and the availability of the raw material are both there,” says Ismail Elshafei, business development advisor at the Gulf Organisation for Industrial Consulting.
Under the agreement with INEOS, EPS Qatar will build the EPS plant which will be finished by mid-2017, at a cost of around $500 million.
“This plant will be the biggest throughout the MENA region with its first phase, there has been a lot of growing demand for the expanded polystyrene, the downstream product of EPS, which is being widely used for insulation, decoration and packaging,” adds Ihab ElZahaby, CEO of EPS Qatar.
The plant, which is expected to be the biggest in the MENA region, will produce 50,000 tonnes of expandable polystyrene per year, after the completion of the first phase. “But we will have the option to debottleneck to 100,000 tonnes per annum in three to five years time,” adds ElZahaby.
The company also plans to build a styrenics plant to manufacture feedstock for the EPS facility worth about $1 billion. The cost of the two combined projects will be $1.5 billion. 70% of the funding will be from Qatar Investment Bank, the other 30% will be equity from Hitmi himself.
Saudi Basic Industries Corporation (SABIC), is currently the only other major producer of expandable polystyrene, producing 30,000 tonnes of the product a year.
“There are efforts to save energy in new buildings and one of the very significant methods to do that is having a proper insulation using the EPS insulation sheets, which in some projects have already showed a power saving of over 50 per cent,” adds El Zahaby.
“We cannot meet this growing demand for domestic energy because it will keep increasing, and we really need to focus on saving energy now,” says Al Hitmi. “Just imagine a house with three bedrooms and a living room. A normal house would need four air-conditioners, but a house with EPS insulation would only need two.”
In fact, just to prove a point, Al Hitmi did exactly this last March with the construction of two identical houses in Baytna, Barwa City in Doha.
The two houses were mirror-images in design, except for the fact that one was insulated with expandable polystyrene, the other without. The two houses have been monitored over the last eleven months and the final results are expected at the end of March 2014.
“By April we will have the results from the two families having lived in the house for one year, and we will expect a 50% energy saving for cooling,” says Al Hitmi.
As a private investor helping to fulfil Qatar’s Sustainability Vision for 2030, Al Hitmi’s EPS Qatar is certainly an interesting case, and his plans to build an EPS plant will only serve to bolster the country’s position as a provider of high quality materials, and with the region’s growing demand for more energy efficient buildings, this could not come at a better time.
– 47% This much of the region’s energy is consumed by residential units
– 8.1% KSA’s construction sector is growing annually at this pace
– 53 mln The GCC’s expected population by 2020
– 2.5% The GCC’s per capita electricity consumption is expected to increase at this rate annually
Source: Arabian Oil and Gas