GPCA '12: Gulf petchem investments to rely on heavier feedstocks

27 November 2012 14:02  [Source: ICIS news]

DUBAI (ICIS)--Future petrochemical investments in the Middle East are increasingly based on heavier feedstocks or focused further down the value chain because of reduced methane and ethane feedstock availability, an industry consultant said on Tuesday.

This may add great complexity on how these investments are implemented but will also open up many downstream opportunities for Gulf states that are increasingly looking to balance profitability and job creation, said David Lines, the Middle East principal for consultancy Nexant.

Downstream projects in the Gulf such as the Sadara petrochemical project in Saudi Arabia are moving away from the "typical regional C1-C4" format, and are supporting downstream industries such as oilfield chemicals, electronics, and consumer goods, Lines told delegates at the 7th GPCA Annual Forum.

The development of downstream industries in the Gulf will also be driven by socio-economic issues, the changing demand dynamics in developing markets as well as governmental incentives, he added.

In the short term, Middle East countries are likely to be faced with poor industry margins amid the economic downturn but conditions are likely to improve in the mid-term as the global economy recovers in the next two to three years, Lines said.

Conditions for the Gulf's petrochemical industry in the mid-term will also be buoyed by the proliferation of downstream specialty chemicals projects coming into play and as government incentives begin to take hold, he added.

The GPCA forum is held in Dubai and runs from 27-29 November.

By: Nurluqman Suratman

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