Gulf petchem plants face new project delays

27 February 2007 12:32 [Source: ICIS news]

DUBAI (ICIS news)--Petrochemical plants in the Gulf were expected to face continued delays as new projects grappled with a shortage of skilled labour and soaring costs, an industry executive said on Tuesday.

Contractors in Saudi Arabia pushed costs up by as much as 25% in 2006 because of a tight labour pool, the senior European industry figure said at a conference in Dubai.

"It's not only the cost but also the level of efficiency has fallen," he told ICIS news.

"There are people working on huge projects who have never even seen a plant before," the engineering group executive added.

Research by consultants Nexant showed that a world scale ethylene cracker now cost $4bn to build compared with around $1.5bn in 2000.

However, despite the rise in costs experts at the conference said delays would trend towards months rather than years for the majority of projects.

Most big government backed projects would be pushed through, said a local Dubai-based banker.

"Any project developer will tell you about the nightmare of escalating salaries and losing people half way through a project," said Mohammed Benayoune, chief executive officer of Oman Polypropylene (OPP).

To mitigate the risk, OPP developed its own internal operations and management team rather than hire in an outside team, which could have walked off the project.

"As a result, we have had fewer manpower losses," he said.

Some 65% of the company is local homegrown talent," Benayoune added.

By: Matt Kovac
+65 6780 4359

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