February 2016

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CARIBBEAN Petroleum Update A Publication of the Caribbean Energy Information System (CEIS)

Februar y 2016 ISSUE

From Petroleum to Commodities

The Petrochemical Industry

Can you imagine a life without gasoline, cosmetics, fertilizers, detergents, synthetic fabrics, asphalt, and plastics? All of these products and many more are made from crude oil. When most people think of petroleum they think of gasoline and diesel fuel. They may even conjure up images of jet fuel, but most will rarely consider the other unexpected places that petroleum byproducts show up in modern life. Since crude oil contains a vast number of different hydrocarbons, various refined products have found their way into everything from plastics to pharmaceuticals. The industry that uses petroleum to produce

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other chemicals is referred to as the petrochemical industry. It is estimated that industrialized nations currently consume petrochemical products at a rate of three and a half gallons of oil per day.

One of the most important uses of petroleum is in the production of ammonia to be used as the nitrogen source in agricultural fertilizers. Prior to the 20th century, ammonia for fertilizer came only from manure and other biological processes. The Haber procontinued on page 2/

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From Petroleum to Commodities: The Petrochemical Industr y cess paved the way for industrial scale production of ammonia. This process involves extracting the methane from natural gas and removing the presence of sulfur and hydrogen sulfide. Steam is then applied over a catalyst to produce hydrogen and carbon dioxide. At high heat and pressure, the hydrogen and gaseous nitrogen produce ammonia, which is then added to chemical fertilizers. Agriculture also depends on the use of pesticides to ensure consistent, healthy crop yields. Much like fertilizers, oil is an important ingredient in many pesticides. In essence, from running farm machinery to fertilizing plants, agriculture is one of the largest users of petroleum based products.

Another industry that uses petroleum is the Plastic Industry. Plastics are integral aspects of many manufactured products such as computer monitors, nylon and Styrofoam. Nylon is present in everything from stockings to mechanical gears and even in car engines, is the most successful petroleum-based plastic to date. Most plastics come from olefins, which include ethylene and propylene. To make plastics on an industrial scale, engineers begin with the raw material called monomers.

Ethylene and propylene contains the hydrocarbons that make up the monomers and these chemicals are obtained from crude oil by the “cracking process� used in refining oil and natural gas. Once various hydrocarbons

continued from page 1/ are obtained from cracking, they are chemically processed to make hydrocarbon monomers and other carbon monomers (like styrene, vinyl chloride, and acrylonitrile) used in plastics.

Another interesting product made from crude oil are car tyres. These are made from rubber and where does rubber come from? Rubber is primarily a product of butadiene. Now, butadiene (1,3-butadiene as it is referred to) is a colorless, non-corrosive gas or liquid with a mild aromatic or gasoline-like odor that originates from the high temperature cracking of petroleum fractions and is distilled out of Crude C4’s. Crude C4 mixture is a stream produced during the steam-cracking process in the manufacture of ethylene. It is a mixture of C4 hydrocarbons, mainly 1,3-butadiene, 2-methylpropene (isobutylene) and butanes. It is usually stored as a liquid under pressure and can also be blended into fuels for the manufacture of gasoline blending components such as gasoline alkylate, polymer gasoline and dimersol and butylenes. Butadiene is used primarily as a chemical intermediate and as a monomer in the manufacture of polymers such as synthetic rubbers or elastomers, including styrene-butadiene rubber (SBR), polybutadiene rubber (PBR), polychloroprene (Neoprene), and nitrile rubber (NR). In turn, these rubbers and their latexes are used to produce other goods and materials:

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•SBR and PBR are used to produce tyres and plastic ma- which have their basis in smaller, simpler organic moleterials cules. Most of these precursors are petroleum by-products.

•Styrene-butadiene (SB) latex is used to produce carpet and paper coatings Other petroleum products made from petroleum by products include dyes and detergents. Petroleum distil•Neoprene is used in gloves, wetsuits, waders and foams lates such as benzene, toluene, xylene, and others provide the raw material for products that include dyes, •Nitrile rubber is used in hoses, gloves, gaskets and seals synthetic detergents, and fabrics. Benzene and toluene Plastics made using butadiene-based rubbers are pri- are the starting materials used to make polyurethanes, marily acrylonitrile-butadiene-styrene (ABS) resins, which are used in surfactants, oils, and even to varnish high-impact polystyrene and styrene-butadiene latex, wood. Even sulfuric acid has its origins in the sulfur that although other plastics use these rubbers as well. Buta- is removed from petroleum. Possibly the most shocking diene is also used in the manufacture of adiponitrile, a usage of petroleum for many people is its appearance precursor for nylon-6,6, which is used to produce car- in foodstuffs such as beer and in medications such as aspirin. pets, textiles and plastic parts.

The most surprising of all the products made from petroleum are found in the Pharmaceutical industry. Petrochemicals are used to manufacture analgesics, antihistamines, antibiotics, antibacterials, rectal suppositories, cough syrups, lubricants, creams, ointments, salves, and many gels. Processed plastics made with oil are used in heart valves and other esoteric medical equipment. Petrochemicals are used in radiological dyes and films, intravenous tubing, syringes, and oxygen masks. Mineral oil and petrolatum are petroleum byproducts used in many creams and topical pharmaceuticals. Tar, for psoriasis and dandruff, is also produced from petroleum.

Most pharmaceuticals are complex organic molecules,

Petroleum is an integral part of modern life in terms of the things it is used to make beyond a gasoline and other fuels. Commodities as diverse as plastics, pharmaceuticals, and cosmetics use various aspects of petroleum as foundations in chemical reactions. Petroleum will continue to play a large role in our lives in the near to medium term future. While technologies are being invented to reduce our dependence on fossil fuels, petroleum still remains an essential commodity for all industries.

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From Oil to Everyday Products

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PETROLEUM NEWS & HAPPENINGS Oil Falls With Glut In Focus After Hopes For Producer Deal Fade [...]...Read more Venezuelan Crude Sales to the United States Declined 14 Pct in Jan [...]...Read more Private Sector Groups Bemoan Fuel Prices [...]...Read more

Caribbean Energy

Low Oil Prices Could Further Affect Economy — Central Bank [...]...Read more Oil Hedge Deal Was Worth It — PSOJ [...]...Read more

United Arab Emirates Backs Gas Prices Up $0.13, Diesel Up $0.33 [...]...Read more Oil Output Freeze[...]...Read PDVSA Said to Import U.S. Crude After Export Restrictions Lifted [...]...Read more more Electricity Rate Down To Five-Year Low[...]...Read more Phillips Maintains Oil Hedge Insurance Is Money Well Spent[...]...Read more Phillips Says Ja Will Continue Hedging If Oil Prices Increase Sharply [...]...Read more

St. Lucians Benefit from Lower Cost of Fuel [...]...Read more

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Prices at the Pump

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FEBRUARY 2016

Retail pump prices for Regular Unleaded Gasoline in the thirteen Caribbean countries reviewed at the end of February 2016 showed price decreases in ten countries ranging from 0.7% and 13.2%. The highest price decrease was seen in Monsterrat of 13.2% followed by St.Vincent and the Grenadines with 11%. Prices in Barbados were relatively stable as prices decreased 0.7%. Prices remained stable in St.Kitts and Nevis and Trinidad and Tobago.

The average retail price at the end of February 2016 was 5% lower when compared to the previous month.

Regular Unleaded Gasoline:Average Retail Price: January - February 2016 (US$/Litre)

COUNTRIES ANTIGUA/ BARBUDA BAHAMAS [91 OCT] BARBADOS BELIZE [87 OCT] DOMINICA GRENADA (95 OCT) GUYANA JAMAICA 87 Octane[E10] MONTSERRAT ST. KITTS/ NEVIS ST. LUCIA ST. VINCENT/ GRENADINES TRINIDAD/ TOBAGO [92 OCT]

JAN 1.11 1.01 1.36 1.00 0.80 1.06 0.95 0.91 0.87 0.94 0.86 0.87 0.42

FEB 1.03 0.95 1.35 1.04 0.78 1.04 0.85 0.86 0.76 0.94 0.80 0.78 0.42

AVG 1.07 0.98 1.36 1.02 0.79 1.05 0.90 0.88 0.81 0.94 0.83 0.83 0.42

AVERAGE RETAIL PRICES

0.94

0.89

0.91

Comparative Retail Pump Prices Regular Unleaded Gasoline January - February 2016 1.60 1.40

JAN

US$/Litre

1.20 1.00

FEB

NOTE: *US Gallon = 3.785 L *Imperial Gallon = 4.546 L *As at November 1, 2009 MTBE was phased out from all gasoline blends in Jamaica and replaced with 10% Ethanol.

0.80 0.60 0.40 0.20 0.00

13 Caribbean Countries

See prices for all products at www.cippet.org

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International OIL PRICES

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Average Weekly and Monthly Crude Oil Prices December- February 2016

50.00

US$/Bbl

40.00 40.40 30.00

36.99 31.32

28.14

20.00 10.00 0.00 Period WK1

Dec-15

WK3 Jan-16

WK4

MTH AVG

Feb-16

Average Monthly Crude Oil Prices 2013-2015 120.00

106.61

105.78

100.00 US$/Bbl

Analysis of International Crude Oil Prices from December 2015 to February 2016 period showed an average price of US$30.19/bbl .

This average price was 19.3% lower than the price in December 2015 and 8.1% lower than the average price in January 2016. The highest weekly price seen in February 2016 for the commodity was US$31.32/bbl-reflected in week four while week two accounted for the lowest price of US$28.14/bbl. The average price reported in February 2016 was 40% lower than the average price seen in February of the previous year.

WK2

80.00 60.00

59.91

40.00 20.00

2013

2014

2015

0.00

Period

FEATURED OFFERS: P E TS TATS - t h e Ca r i b b e a n E n e rg y I n fo r m at i o n System (CEIS) primary report of historical annual petroleum energy statistics provided for 18 Caribbean Countries. Included are data on total energy production, consumption, and trade; overviews of petroleum, natural gas, electricity, as well as financial and environmental indicators for over twenty years.

Scientific Research Council,

Hope Gardens, Kingston 6, Jamaica 1-876927-1779 (Telephone) 1-876-977-1840 (Fax)

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