GOIC expects the production of ten million tons of urea in GCC in 2007

This industry highly contributes to achieving food security and to promoting exports of industrial products, thus playing an integral role in GCC economic and commercial growth.

Due to the tendency of most countries to develop their agricultural methods and to increase their products accordingly in order to safeguard food supplies as well as exportation, the significance and utilization of fertilizers would increase and expand. Accordingly, GCC member states will contribute to facing the demand for chemical fertilizers at an international level due to the currently running expansions in some GCC plants; as well as finalizing some new plants especially in the Sultanate of Oman.

Basic elements for a GCC chemical fertilizers industry are available specially the large amounts of raw materials such as Natural Gas, Sulfur and Phosphate Stone. Other elements include availability of appropriate infrastructure, the distinguished geographical location of the GCC member states within the reach of international markets, and the accumulated marketing experience of the existing firms.

The continuous growth of this industry in GCC member states has resulted in the establishment of some 18 plants till 2005, with investments and workforce culminating to US D 4.8 billions and 5500 workmen, respectively.

The chemical fertilizers produced in GCC member states are based on ammonia. Ammonia production in 2004 reached some 5.2 million tons; thus representing 59% of the total production of the Arab countries and some 4% of the total world production.

Most of ammonia production is intended for the manufacture of urea fertilizers, while the rest is directed toward exportation. Urea production in GCC member states amounted to over 6.7 million tons in the same year, thus constituting more than 66% of the Arab production and about 5.8% of the total world production.

In addition, the GCC production capacity of the ammonium phosphate fertilizers, as well as the compound and liquid fertilizers, reaches some 1.6 million tons, while the annual production is estimated at 400,000 tons. Sulfuric Acid, as an intermediary substance, has a designed capacity of 417,000 tons in the GCC existing plants, while the production capacity amounted to 257,000 tons in 2004.

Most of chemical fertilizers industry in GCC member states is currently centralized on producing nitrogen fertilizers specially urea and ammonium phosphate, due to availability of raw material which is natural gas. Yet, it can be noticed that potassium fertilizers and super-phosphate fertilizers are not manufactured in the region due to the lack of potassium and non-exploitation of phosphate mines. However, the exploitation of phosphate stones, abundantly existing in Jalamid in Saudi Arabia, and the establishment of phosphate fertilizers industry, are expected to start soon.

It is worth mentioning that ammonia and urea prices are escalating. The average price of one ton of urea increased from US D 175 in 2003 to US D 242 in 2004. Also, the average price of one ton of urea increased from US D 146 in 2003 to US D 184 in 2004. The average price of packed urea reached some US D 232 in March 2005. The reasons behind this increase is contributed to the increase in the natural gas prices in USA as well as the increase in the demand on urea in the markets of USA, Europe and Asia.

The study urges GCC states to exert more cooperation and coordination efforts to further exchange information amongst the manufacturers in order to maintain their traditional markets and to find new markets whenever current markets are not in progress.