InterviewGPCA '11: Downstream expansion a must for GCC producers

12 December 2011 04:50  [Source: ICIS news]

By Ong Sheau Ling

GPCA Secretary General Al-SadounSINGAPORE (ICIS)--Petrochemicals producers in the Gulf Cooperation Council (GCC) region see the need to expand further downstream to manufacture more value-added products and ensure sustainable growth for the business, a high-ranking industry official said on Monday.

Expansion is focused on the engineering plastics and performance chemicals, said Abdulwahab Al-Sadoun, secretary general of the Gulf Petrochemicals & Chemicals Association (GPCA), in an interview with ICIS.

ICIS is a co-organiser of the 6th GPCA Forum in Dubai to be held on 13-15 December, with the theme “Moving Downstream – Creating Value and Sustainable Growth”.

More than 1,500 delegates from around the world are registered for this year’s biggest petrochemical event in the region.

"The main drivers behind the need to move downstream are to add value to the producer, to address the potential growth and to create job opportunities regionally, to take advantage of the working age demographics," Al-Sadoun said.

With majority of GCC’s production derived from feedstock gas - a natural resource with strong availability and is quite cheap in the Middle East - the most developed value chains in the region are ethylene and methanol.

But with the diversification into using other feedstocks, like naphtha, the GCC producers will be able to produce higher volumes of propylene that has not been possible in gas-based production.

Using naphtha as feedstock also meant a move for GCC producers to integrate petrochemical operations with the refineries and will translate to increased output of aromatics products such as benzene, toluene and xylenes.

"This will enable the upstream players to diversify their product portfolios," Al-Sadoun said.

The GCC’s demographics also indicate a strong availability of work force that can be tapped to realise the expansion and integration of the region’s crude oil and petrochemical producers, he said.

GCC comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE.

In Qatar, about 28% of the country’s are about 25 years old, while in Saudi Arabia, the age group accounts for a bigger proportion of the total population at 48%, he cited.

But this movement towards producing more value-added products is also going on in other regions, like Asia.

"This will trigger a race, and each region has its different strengths and weaknesses. The most successful region will win, disregarding any actions done by the various governments to opt for protectionism," Al-Sadoun said.

As long as suppliers can support and service their customers, they should not be penalised such as in the form of tariffs, he said.

Saudi Arabia and Oman, along with Singapore, were slapped with tariffs on polypropylene (PP) shipments to India, ranging from $28.49-323.50/tonne.

($1 = €0.75)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Ong Sheau Ling
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