China’s refining industry is making significant investments to expand its production capabilities for high-end products utilized in the wind and solar sectors. This move may seem contradictory to the energy transition towards renewable sources, but it highlights an important fact: wind and solar energy cannot exist without oil and gas refining.
Petrochemicals producers in China are spending billions to enhance their production capacity for high-end materials like carbon fiber for wind turbine blades, polyolefin elastomers for solar panels, and polyethylene for lithium-ion batteries. The petrochemicals segment of the oil and gas industry is considered a crucial part of the energy transition, as even in a world dominated by electrification, there will still be a substantial need for petrochemical products.
Major oil companies, such as Aramco, are recognizing this and positioning themselves as key suppliers in this area. Aramco has signed deals with Chinese petrochemical producers and has invested in domestic growth by partnering with TotalEnergies for a new petrochemical complex in Saudi Arabia.
Iraq and Qatar are also eyeing growth in the petrochemical sector. Iraq’s Nibras petrochemical complex project is set to resurface, while QatarEnergy greenlit the Ras Laffan Petrochemicals project in partnership with Chevron.
Even Indian refiners are shifting their focus towards petrochemicals, seeking to “de-risk” their future amid the energy transition. The demand for high-end materials is driven by overcapacity and weak demand for commodity chemicals, as well as China’s growing industries in solar and electric vehicles.
Despite the transition away from hydrocarbons, the energy industry still relies on these hydrocarbons and their derivatives, as there are currently no viable substitutes for the petrochemicals essential for wind and solar installations. As the global push towards renewable energy continues, the petrochemical sector ensures a secure and long-term demand for oil and gas products.