Will US politics hit Middle East plans?
10 June 2002 00:00 [Source: ICB]
Maximising the potential of their petrochemical sectors is
increasingly a key strategy for a number of Middle East countries.
These see industrial, economic and employment benefits flowing from
a rapidly expanding petrochemical base.
And yet, externally, a number of geo-political upheavals and
internal disputes clouds the picture for key players. The 11
September terrorist attacks on New York and Washington, and the
Bush administration's declared 'war on terrorism' has changed
everything. For the US, it has intensified its animosity towards
Tehran, culminating in President Bush's declaration that Iran is
part of an 'axis of evil'.
The country also features high up on the US's list of state
sponsors of terrorism. Interestingly, the US approach contrasts
sharply with that of the European Union which is keen to support
and strengthen ties with reformist elements of President Khatami's
EU countries are pushing hard for the establishment of a trade and
cooperation agreement with Iran, which they hope will give European
companies a clear advantage over those from the US. At the recent
fourth Iran Petrochemical Forum in Tehran, many European companies
were present and top executives from Shell and BP gave keynote
addresses supporting greater partnerships with Iran. US
petrochemical companies were noticeable by their absence.
The terrorist attacks have also strained relations between the US
and Saudi Arabia. Legislators on Capitol Hill have noted that most
of the hijackers were from Saudi Arabia and sections of the Saudi
elite are believed to have links with radical Islamic groups, which
are viewed as supporters of terrorism in the US. Influential voices
in Washington, such as ex-CIA director James Wolsey, have called
for a reduction in US dependence in Saudi Arabian oil and a
withdrawal of US military forces from Saudi Arabian bases.
The next stage in the development of the Middle East's
petrochemical sector will occur in a more complex and difficult
global climate. However, leading players in the region are doing
all that they can to create a favourable environment for investment
and deeper involvement in the global marketplace.
Sabic's proposed acquisition of the petrochemical assets of DSM of
the Netherlands is a huge step in the Saudi company's aim to become
a leading global petrochemical player. In Iran, NPC executives will
applaud parliament's ratification of the Law for the Attraction
& Protection of Foreign Investment, which NPC president and
deputy petroleum minister of Iran, has said is 'necessary to give
more freedom to the economy and simplify investment law'.
Leading lights within NPC have argued for some time that for the
country's petrochemical industry to fulfil its potential and
flourish a more favourable economic climate is necessary. The new
legislation allows for more direct foreign investment and gives
greater protection to foreign and domestic investors, allowing for
the repatriation of profits in hard currency.
Regional petrochemical front-runners Sabic and NPC have recently
introduced new business models which they believe will increase
their competitive edge and allow for greater penetration of global
markets. Sabic has established six strategic business units in
support of plans to improve customer service, enable faster
decision making and increase business accountability.
Iran's marketing operation - Iran Petrochemical Commercial Company
- is developing a new marketing strategy which it believes will
allow for an expansion of market share and lead to greater market
penetration. NPC has also stepped up efforts to support the
downstream petrochemical sector by providing technical and
financial assistance to potential investors and offering
competitively priced feedstock.
Middle East petrochemical players are doing their part to ensure
that their sector flourishes. But will world events conspire to
derail their full potential?
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