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Petrochemicals are chemicals produced from natural gas, natural-gas liquids, or refinery products derived from crude oil distillation, or cracking. These compounds are made up of hydrocarbons.
Some of the products referred to as "petrochemicals" were in the past produced from charcoal, coal-tar distillation by-products, acetylene, or fermentation alcohol. Industrial organic chemistry, upon which the science of petrochemicals is based, was originally the domain of German, British, and other European firms.
The growth of the refining industry in the United States, based on abundant petroleum and natural gas resources as well as on the development of sophisticated thermal and catalytic oil-cracking processes, created the conditions for the present petrochemical industry.
Although the main focus of the refining industry has always been the supply of motor and heating fuels, the oil-transformation processes that were developed in the 1920s and 1930s also provided by-products in the form of highly reactive hydrocarbons--the petrochemical "building blocks"--that were quickly seen to be better and less expensive feedstocks than coal or alcohol for the production of many organic chemicals.
World War II greatly accelerated the rise of the U.S. petrochemical industry. First, the suddenly increased demand for high-octane aviation gasoline led to a surge in refinery capacity, with a concomitant increased production of reactive hydrocarbons.
Second, the need for synthetic rubber required the development of a large-scale technology for producing benzene, styrene, butylenes, butadiene, and acrylonitrile.
The war was also responsible for creating a demand for many other petrochemical products: nylon for parachutes, cumene for rich aviation gasoline, and polyethylene to shield electric cables in radar equipment.
At the end of the war, pent-up consumer demand kept plants running, and petrochemical sales enjoyed more than 10% annual growth rates for well over two decades.
Industry Information
The petrochemical industry is now an important growth industry for Malaysia amongst other chemical sub-sectors such as petroleum products, inorganic chemicals, oleochemicals and industrial gases.
The development of petrochemical industry has been in great progress since the early 1990s. The total investment in the petrochemical industry has exceeded RM32 billion by end of 2001.
The growth of the petrochemical industry is supported by the Malaysian Government and Petroliam National Berhad (PETRONAS), the national oil and gas company, both determined to make Malaysia a regional hub and base for petrochemicals and for the ASEAN market.
PETRONAS is establishing itself to be a force in the global petrochemical industry with greater participation in international petrochemical projects as well as continuing to embark on new petrochemical projects domestically.
The positive and flexible policies adopted by the Government has been a strong pull factor for drawing direct foreign investments in the petrochemical industry.
The industry has developed rapidly thanks to the various advantages enjoyed by the industry including the availability of feedstock, good infrastructure and supporting industries, cost competitiveness as well as strategic location in ASEAN.
All these factors contribute to the increase in participation of multinational corporations that continues to be important in facilitating the access of the Malaysian petrochemical industry to the global market.
Foreign multinational petrochemical giants which have established joint-ventures with PETRONAS in Malaysia includes BASF, BP, Eastman Chemical, Idemitsu Petrochemical, Mitsui, DSM and Dow.
Today, the significant investments by PETRONAS and these major MNCs have made the local petrochemical industry well diversified with the availability of a wide range of products.
All basic petrochemical products from methane to the aromatics and petrochemical intermediates that are mainly exported are now available for development of downstream products like specialty chemicals.
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