06 June 2006 14:39 [Source: ICIS news]
SINGAPORE (ICIS news)--The competitive landscape in the Middle East has shifted to the extent that it is no longer a given that a petrochemical project in the energy-rich region will automatically reap fantastic returns, said a new report on the region.
Project costs have escalated on the back of rising raw material and labour costs and the full order books of the contractors, it said.
“As a result, building a complex in the region is about twice as expensive as two years ago,” John Richardson, director of ICIS insight ?xml:namespace>
In addition, there is a there is a shortage of ethane in
“Cracking more propane and butane results in a wider and more complex range of derivatives, thereby increasing both capital and sales and marketing costs,”
The Saudi government is also asking project proponents to come up with a wider range of derivatives before applications for gas supply will be taken seriously, the report said.
Unemployment was unofficially as a high as 25% in Saudi, and so the idea of producing a broader range of derivatives is to stimulate manufacturing industry, say the authors.
Also, if plans to venture into acrylonitrile, polycarbonate (PC) and other higher value-added production prove successful, this will act as a hedge against the coming expected collapse in polyethylene (PE) and monoethylene glycol (MEG) pricing.
If project planners can clear these higher approval hurdles, the Gulf Co-operation Council (GCC) region is awash with liquidity. In the old days, there were only around four major lenders to petrochemical projects in the area but now there are also many second-tier lenders prepared to pitch up with very favourable financing terms.
Numerous private companies are investing in
For more details on the report, contact Roland Kester Cher at firstname.lastname@example.org
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