Middle East region to become main global petrochemical hub

Dec 06, 2009 01:00 AM

The shift of the global petrochemical industry's centre of gravity to the feedstock-rich Middle East is occurring more swiftly than anticipated, as plant after plant comes on-stream in the region, and production falters elsewhere in the world under the recession.
Over the next 5 years, 19 mm tpy of ethylene, the key building block for petro-chemicals, is scheduled to be added to the production capacity across the Middle East, nearly doubling current capacity and providing extensive raw materials for downstream industries. By 2015, the region will supply one-third of the world's ethylene glycol, used in fibres and anti-freeze; 20 % of global polyethylene and 13 % of higher-value polypropylene, according to Chemical Week.

Saudi Arabia is expected to become the main global centre of petrochemicals production and no less than 30 new petrochemical plants are scheduled for completion in 2010 -- including mega-projects in Al Jubail and Yanbu -- with another 40 in the planning phase. Other large-scale units are on-stream or starting up in Qatar, Kuwait, Oman and Abu Dhabi, and an estimated investment of around $ 170 bn is envisaged by the year 2015.
"Beyond these basic petrochemicals projects, a new wave of investments in the Gulf region will target specialty chemicals and high-value plastics production, which will add value and will service industrial clusters based on the building blocks provided by the chemical industry," Dr Abdulwahab Al-Sadoun, GPCA Secretary General, said.

He noted that governments in the region are taking new measures that will further support the product portfolio diversification in the region's petrochemical industry. He cited the example of the Saudi Cluster Program, which is part of the National Industrial Strategy recently launched in Riyadh to nurture value-added industrial manufacturing and development in the Kingdom.
He noted that the program's five initial clusters will include automotive, construction, plastic packaging and consumer appliances, all of which will benefit the regional petrochemical industry.

The Middle East's leading petrochemical producers such as Saudi Arabia have emerged over the last two decades as bastions of exports to world markets while spawning a wave of industrialization in the region by supplying the raw material for chemicals and polymers. With the continued expansion of the industry across the region, more regional surpluses will be destined for export markets in Asia, Europe and the Americas.
The past recession-hit year has seen an increase of trade issues, with some importing nations raising dumping allegations against the region, and GPCA questioning the anti-dumping moves against member companies and countries.

The global economy is also on the threshold of an upturn, following a sharp contraction in the past year that prompted producers to consolidate assets, realign portfolios and reassess business strategies. Armed with leaner cost structures and increased agility, leading global producers are geared to take advantage of the impending recovery.
"The global recession is over, led by Asia. The slowdown in the Middle East is reversing," says Brad Bourland, Chief Economist at JADWA Investments. According to Bourland, the global economy is expected to grow around 3 % in 2010, with China driving growth at 9 %.

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