Naphtha normally refers to a number of flammable liquid mixtures of hydrocarbons, i.e. a component of natural gas condensate or a distillation product from petroleum, coal tar, or peat boiling in a certain range and containing certain hydrocarbons.

Globally, ethanol makes up only a small percentage of transport fuel – about two percent – but total consumption in 2008 was more than 65,000 million litres (ML) and that figure is growing very quickly. The International Energy Agency predicts that biofuels have the capacity to displace 5.4% of the world’s gasoline just by 2013. Global fuel ethanol sales are growing much faster than petrol sales.

Naphtha is characterized as light or heavy depending upon its distillation cut, and is used as a feedstock of high-octane gasoline. Heavy naphta is often upgraded further.

Light naphtha is thus the least processed product of a refinery; as a result, less energy is required to produce it, and it accordingly carries a smaller carbon footprint than gasoline or diesel.

Major applications for naphtha include use as a chemical feedstock for steam cracking to produce petrochemicals (ethylene, propylene and pyrolysis gasoline) and as a fuel input to catalytic reforming for gasoline blending stock and BTX (benzene, toluene and xylenes) extraction.

Gas oil is used as a chemical feedstock for steam cracking, although generally less preferred than naphtha and natural gas liquids (NGLs, including liquefied petroleum gases).

During 2012–2017, demand for naphtha and gas oil for petrochemical use is projected to increase at more than 3% per year, driven largely by growth in China, Other Asian countries and the Middle East. Consumption of heavy petrochemical feeds in the developed regions of the world is not expected to grow at all over the next five years through 2017.

While there will be petrochemical volume recovery in North America, feedslate selection will favor ethane and propane; in Western Europe, production will face the headwinds of higher costs for derivatives.