Aug 22 2012
|more articles from|
GCC petchem capacity to rise 46% in 2 years
The GCC petrochemicals production capacity grew 13.5 percent last year to nearly 116 billion tons, with Saudi Arabia alone generating more than half of the $100 billion in sales registered by the GCC petrochemical sector, the report said.
The Kuwait Financial Centre (Markaz) said Saudi Arabia tops the list with $12 billion of projects under execution and another $41 billion in future projects. Furthermore, petrochemical projects worth $19 billion are under execution in the GCC providing opportunities in both the long and short terms.
Abdulmohsen Al Majnouni, chairman SAS-AIChE, the Saudi Arabian section AIChe, speaking at the World Refining Association recently, explained how to capitalize on these opportunities while highlighting the vulnerabilities of the sector.
The petrochemical industry in the GCC has been vulnerable to financial crisis, as it has consistently seen up and down cycles in recent years. It has been revealed that these cycles follow the refining industry cycles with a six to 12-month lag. However with recent advances in the petrochemical industry, the cyclic effect may not be the case anymore.
"The introduction of specialty or performance chemicals has differentiated the refining from petrochemical industries," Al Majnouni said.
"The more creative manufacturers are in developing new enhanced products, the more sustainable they become. The more efficient the petrochemicals industry becomes, the less susceptible and less prone to financial crisis they are."
Moreover, Al Majnouni said "the major short-term opportunities are in more integrated speciality and performance chemicals. These are basically secondary and tertiary industries. This is especially true for the Middle East countries as the supply of cheap feedstock is questionable." In the long term, the opportunities will be found in the compounding industries, detergent basics, pharmaceuticals, rubbers and tires, he added.
Previously, companies operating in the GCC have enjoyed subsidized feedstock and less competition in the petrochemical area, however, now, competition and the availability of feedstock are two factors that demonstrate promise and excitement, he noted.
"Now, not only has the feedstock become scarce and limited, but the entrance of many international companies in the business has made it very competitive. Companies have become smarter, energy efficient, cost effective and more sustainable," Al Majnouni said.
The seventh annual Petchem Arabia summit which will be held on Sept. 30-Oct. 3 in Bahrain under the patronage of Sheikh Ahmed bin Mohamed Al Khalifa, Minister of Finance, Minister in charge of Oil and Gas Affairs, chairman, National Oil and Gas Authority (NOGA).
According to the CMAI (Chemical Market Associates, Inc.) and BMI, the global ethylene capacity of around 133 million tpa (concentrated in Asia, followed by North America, Europe and the Middle East) could increase to 159 million tpa by 2014.
Given the significant capacity expansion underway, the Middle East's share in global ethylene capacity could increase from 19 percent in 2009 to 23 percent in 2014.
The Middle East ethylene production is forecast to rise from 21 million tpa to more than 30 million tpa by 2014, while that of China could increase from 18 million tpa to 25 million tpa over the same period.
Global consumption of petrochemicals is likely to be primarily driven by emerging economies. China, which consumes 22 percent of the world's ethylene, but contributes just 11 percent to the global output, will remain the major consuming market.
BMI said despite the setting up of new production facilities, the ethylene deficit in China would be 8.5 million tons in 2014. In fact, in spite of the capacity expansions, the country's self-sufficiency may not move beyond 55-60 percent levels by 2014. As a consequence, China is likely to rely on imports of polyethylene and polypropylene until 2015, BMI noted.
Saudi players, with their proximity to this high consuming Asian market, is likely to benefit the most and grow, on account of expanding production capacity and feedstock cost advantage that they have over the players in developed and developing markets.
© Copyright Zawya. All Rights Reserved.