Mideast producers must strategise in downturn

DUBAI (ICIS news)--Petrochemical players in the Middle East would have to implement innovative strategies to improve their profitability and retain their competitive edge during the current downcycle, Equate's president and CEO said on Tuesday.

 

"Continuing volatility in crude oil prices, declining margins, high project costs, constraints in bank lending and supply chain bottlenecks are some of the short-term concerns that confront the Middle East petrochemical industry today," Hamad Al-Terkait told delegates at the First Middle East Petrochemical Conference.

 

Petrochemical players in the region also faced increasing competition from integrated refinery players who could optimise their margins in a low oil price scenario, he said.

 

However, Middle East petrochemical producers could remain on top of the game if they evolved strategies to achieve manufacturing excellence to optimise operating costs and ensure reliability of supply, he said.

 

"We should incorporate optimisation tools such as Six Sigma to achieve a reputation for high reliability in tune with the demands of key customers," he said, adding that producers needed to diversify their markets so that they could contend with declining demand in some of maturing markets.

 

Sharing of utilities and optimising supply chain management would also help improve profitability during a downturn, Al-Terkait said.

 

Regional players would also need to focus on people development to secure high-skilled labour to operate and maintain the complexes, Al-Terkait said.

 

"This would also address the problem of rising unemployment among youth in the region," he said.

 

Equate is a joint venture of Kuwait's Petrochemical Industries Co (PIC) and Dow Chemical, with each holding a 42.5% stake. The remaining 15% stake is held by Kuwaiti companies.

 

The two-day conference, organised by ICIS and Nexant, ends on Wednesday.