Gulf petrochemicals industry aims to sustain competitiveness amid challenges
- United Arab Emirates: Saturday, December 29 - 2012 at 08:13
- PRESS RELEASE
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. Latest GPCA data show that petrochemicals capacity is continuing to expand in the GCC. Regional capacity grew by 10% in 2011, reaching 121 million tons per annum.
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.
"The Gulf petrochemicals industry is bracing to sustain competitiveness keeping in mind the new market realities. Following the success of the 7th Annual Gulf Petrochemicals and Chemicals Association (GPCA) Forum, organized in Dubai from November 27-29, 2012, Gulf producers are exploring opportunities to expand capacity, diversify production and realize the region's full potential to meet oncoming challenges and opportunities," Dr. Abdulwahab Al-Sadoun, Secretary General of the GPCA, said.
"The success of the 7th Annual 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," added Al-Sadoun.
He concluded, "The regional industry must continue to work 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."
Gulf countries currently hold around 20% 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 fornew challenges, especially because a cooling Chinese economy will lead to reduced demand for Gulf exports.
Randy Woelfel, CEO NOVA Chemicals, said, "Shale gas discoveries in North America are 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."
The most worrying problem of all is 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% of proven global gas reserves but only 11%of total output. While global consumption plateaued over the last 12 months, gas use in Saudi Arabia jumped more than 13%, 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, Chairman, 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 Arabia, Kuwait, Qatar and Abu Dhabi are embarking on an aggressive growth strategy through the acquisition of assets in major markets.
Abu Dhabi continues to set the pace for petrochemicals development in the UAE, with sales of $2.7bn in 2011, reflecting 21% revenue growth in comparison to 2010. Total output last year was 6 million tons, or 5% of the Gulf's total production of 120 million tons. Abu Dhabi also adopted an ambitious inorganic growth strategy designed to strengthen its industry's position in the plastics sector, both in terms of the products portfolio and access to advanced technology.
The Forum also provided a platform to showcase the contribution petrochemicals and chemicals to the diversification of local industry and career development for the indigenous workforce. According to new research by the GPCA released at the Forum, the Gulf petrochemicals sector added 34,564 jobs between 2010 and 2011, an increase of 11%. It said, "88% of the new positions went to Saudi nationals."
The GPCA finding said, "The industry's total workforce in the UAE stood at 8,000 last year, equivalent to 2% of all employees in the country's manufacturing sector."
The Annual GPCA Forum has been growing year on year since its inception in 2006 and has become the flagship event in the Middle East, a region of critical importance in the global chemical industry. This year, more than 1,600 delegates attended the three-day programme of keynote presentations, seminars and networking lunches, as well as the event's gala dinner and exhibition.
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