LONDON, UK (GlobalData), 22 March 2012

Newly discovered pre-salt oil reserves in South America are expected to change the face of the global petrochemical industry's feedstock supply, according to a new report by business intelligence expert GlobalData.

The new report* found that the new reserves will help balance the feedstock scarcity being experienced by many countries in the Middle East, the world's fastest growing petrochemicals producer, enabling many companies to use naphtha feedstock for upcoming petrochemical projects in the future.

Brazil therefore has the potential to become one of the largest crude oil producers in the coming years, representing a potentially huge source of naphtha feedstock. The Brazilian petrochemical industry is set to start large-scale crude oil production from these pre-salt reserves this year, which will benefit the country by strengthening its oil production and exports.

Brazil became a net exporter of crude oil in 2009, and, according to International Energy Association (IEA) Short Term Energy Outlook 2011, Brazil will continue to remain a net exporter of crude oil through to the end of 2012. At the same time, the country's growing crude oil supplies from its new, large-scale activities will dictate naphtha production, creating tremendous amounts of feedstock and elevating the status of the Brazilian petrochemical industry in the global arena.

Feedstock represents the raw material of a refining process, with its cost determining the competitiveness of end products. Naphtha is a liquid mixture of hydrocarbons, produced through the distillation of crude oil by a process called steam cracking. It is relatively easy to procure and has higher propylene and butadiene yield than NGLs, making it popular with most petrochemicals producers.

The global petrochemical industry is dominated by naphtha feedstock, which accounted for a 58.4% share in overall petrochemical production during 2010. Naphtha is the primary feedstock used for petrochemical production in Asia-Pacific and Europe, meaning Brazil has ready-made markets for its increasing production activity.

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About Petrochemical Industry - Key Geographies Experiencing Change in Feedstock Scenario
The study provides an in-depth analysis of the petrochemical feedstock supply scenario in key locations, while explaining the reasons for a decrease in the supply of ethane feedstock in geographies such as the Middle East and Canada. It also explains the impact of new oil and gas discoveries on the petrochemicals industries in countries such as the US, Brazil and Canada. The study provides the basic petrochemicals (ethylene, propylene, butadiene, benzene, toluene, xylenes and methanol) capacity split by feedstock for all the five regions. The report highlights the change in the supply trend of petrochemical feedstock sources such as natural gas and crude oil. The report is built using data and information sourced from proprietary databases, primary and secondary research and in-house analysis by GlobalData's research team of industry experts.

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© Press Release 2012