Thursday 25 December 2014
 
»
 
»
Story

Gulf petchem industry plans 2013 growth strategy

Dubai, December 30, 2012

Gulf petrochemical producers are exploring opportunities to expand capacity, diversify production and realize the region’s full potential to meet oncoming challenges and opportunities, said an expert.

The petrochemicals industry is bracing to sustain competitiveness keeping in mind the new market realities, remarked Dr Abdulwahab Al-Sadoun, the secretary general of the Gulf Petrochemicals and Chemicals Association (GPCA).

His remarks come following the success of the 7th annual GPCA forum organized in Dubai last month.

The theme of the forum, ‘Sustaining competitiveness in a rapidly changing world,’ reflected the scale of the challenges and opportunities facing the regional petrochemicals industry, he stated.

According to him, the petrochemicals capacity was continuing to expand in the GCC with the regional capacity surging 10 per cent in 2011 to reach 121 million tons per annum.

Between 2007 and 2011 regional petrochemicals capacity expanded at 13 per cent compounded annual growth rate, said Al-Sadoun, citing the latest GPCA data.

At the same time, wage inflation and rising raw materials costs, incurred as the global economy edges out of recession, are having a knock-on effect on the bottom line of the GCC petrochemicals sector, he added.

“The success of GPCA Forum highlights the Gulf petrochemicals industry’s remarkable growth over the years. The industry has come so far by making optimum use of the opportunities available. No doubt, the regional industry is facing uncertainties but we have managed to demonstrate strong growth in spite of the challenging market conditions,” said Al-Sadoun.

The GPCA chief urged the regional industry to continue working together, more closely than ever, to sustain competitiveness in the face of the new market realities.

"We are optimistic about the future and aim to achieve growth focusing on technology, innovation and long-term partnerships," he noted.

GCC currently accounts for 20 per cent of the world’s proven natural gas reserves. Despite the cost competitiveness of Gulf-based petrochemicals producers built on such strategic assets, experts at the forum urged the industry to prepare themselves for new challenges, especially because a cooling Chinese economy will lead to reduced demand for Gulf exports.

Randy Woelfel, the CEO of Nova Chemicals, said shale gas discoveries in North America were adding significant volumes to global energy supplies, which is another area of concern for Gulf producers.

While the shale gas boom in North America promises to provide fresh impetus to petrochemicals producers there, options are getting limited before Gulf producers, as the Eurozone offers limited growth opportunities amidst the current financial crisis, he pointed out.
 
However, the most worrying problem of all, the expert pointed out, was that the region appears to running short of natural gas despite its massive reserves.

According to the latest BP Statistical Review of World Energy, the region is sitting on an estimated 1,496.2 trillion cubic feet of natural gas. However, this is not enough to sustain the growing demand for gas. More and more industries besides petrochemicals are now competing for natural gas.

The Gulf’s rapidly growing population is also placing ever increasing demands on gas for electricity generation and water desalination.

Moreover, price controls are deterring further production of existing reserves, to the extent that Gulf countries may account for 20 per cent of proven global gas reserves but only 11 per cent of total output, the expert added.

While global consumption plateaued over the last 12 months, gas use in Saudi Arabia jumped more than 13 per cent, the highest annual increase after China.

Against the backdrop of weakening global growth, ‘Sustaining Competitiveness’ by producers and exporters will remain a priority for all in the hydrocarbon sector in the days ahead.

In his keynote address, Chad Holliday, the chairman of Bank of America, stressed that sustainability within the petrochemical industry was critical to the industry’s long-term competitiveness.

The forum also highlighted encouraging developments for the industry. Beside the expansion of the indigenous petrochemical production capability, the Gulf producers from Saudi, Kuwait, Qatar and Abu Dhabi are embarking on an aggressive growth strategy through the acquisition of assets in major markets.-TradeArabia News Service




Tags: Gulf | growth | production | forum | petrochemicals |

More Energy, Oil & Gas Stories

calendarCalendar of Events

Ads