InterviewGPCA '13: GCC petchem competitiveness hinges on innovation

18 November 2013 06:09  [Source: ICIS news]

By Nurluqman Suratman

Abdulwahab Al-Sadoun, Secretary General, GPCADUBAI (ICIS)--Petrochemical players in the Middle East must continue to innovate to stay competitive amid rapid industry changes, particularly in feedstock supply brought on by the shale gas revolution in the US, a high-ranking industry official said on Monday.

“We all know that innovation is the fuel for corporate longevity in this era and in this competitive dynamic landscape, you need to be ahead of your competitors in terms of project services, supply chain … so it is very critical to be innovative and to create an innovation culture in the [Gulf Cooperation Council or GCC] region,” Gulf Petrochemicals and Chemicals Association (GPCA) secretary general Abdulwahab Al-Sadoun told ICIS.

The GCC consists of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE).

Innovation will be the theme of GPCA’s annual forum in Dubai on 19-21 November that should draw 1,800 delegates, Al-Sadoun said.

Most Middle Eastern producers manufacture commodity products that do not require significant innovation infrastructure, but this will need to change in the long term, he said.

“There is an ongoing drive towards performance chemicals and engineering plastics, so there is a need to invest in creating the infrastructure in the region with this in mind,” the GPCA secretary general said.

“We have already seen several companies investing in and building innovation centres, which are geared towards project applications and development,” Al-Sadoun said.

The need to diversify downstream beyond commodity-type products is especially important in light of the resurgence in the US petrochemical industry, brought about by advancements in shale gas production, he said.

“Shale gas is a reality, and with new cost-effective plastics coming out of the US, there will be new dynamics in the global market. With the current expansion drive in the US, we expect it to be a net exporter of plastics and this to us is creating some challenges as the bulk of our exports is plastics,” Al-Sadoun said.

Analysts have warned of a slowdown in growth in the region due to the availability of cheaper feedstock in the US because of the shale gas boom.

The US has shale gas reserves of up to 665 trillion cubic feet, data from the US Energy Information Administration showed.

“I would expect that there will be increased competition within the global market, and this will have a strong impact on the marginal producers. However, this will not happen in the short or medium term,” Al-Sadoun said.

($1 = €0.74)

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

By: Nurluqman Suratman

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