GCC petchem industry transformation key to stay competitive

Source: ICIS News


SINGAPORE (ICIS)--The Gulf Cooperation Council’s (GCC) petrochemical industry must continually transform itself to meet the challenges posed by an increasingly competitive global landscape, and to capitalise on new opportunities and markets, the secretary general of the Gulf Petrochemicals and Chemicals Association (GPCA) said.

“We are in an industry where transformation is not an option, it is critical in order to remain competitive,” Abdulwahab Al-Sadoun told ICIS.

“In this part of the world (GCC) and elsewhere, the industry is affected by changing dynamics such as reduced feedstock advantages, growing economic competition and the emergence of shale as well as coal-to-chemicals in China,” he said. “It will benefit the industry to transform itself to be a winner in such a landscape.”

The GPCA will hold its 12th Annual GPCA Forum on 27-29 November this year in Dubai, UAE, with the theme “The chemical industry in transformation: A new journey begins”.

The forum this year is expected to attract more than 2,000 delegates, according to Al-Sadoun.

In the GCC, raw material shortage is one of the key challenges regional petrochemical players are facing today, after three decades of strong growth on the back of availability of low-priced feedstocks, he said.

“Competition for gas allocation from other industries such as power generation, water desalination and metal processing are among the challenges, but they are also triggering a new drive for energy efficiency within our member companies,” Al-Sadoun said.

Member companies are now exploring new markets overseas to be close to customers, particularly those in Asia, while many are looking to leverage access to shale gas in the US, he said.

“We are also seeing more backward integration between refining and petrochemical facilities, with a number of projects being announced in Kuwait, Oman and Saudi Arabia. All the newly built refineries in the region do have integrated chemical operations so it is one of the avenues to achieve competitive advantage,” the GPCA secretary general said.

“There is an emphasis to further develop the value chain by producing more value-added performance chemicals which are smaller in scale in terms of volumes but less cyclical as compared to commodities,” he said.

This product diversification drive is going to stimulate a new set of downstream industries in the region, Al-Sadoun said.

Al-Sadoun pointed to rising number of innovation (R&I) centres that are being set up in the GCC to develop new applications for existing products to replace traditional imported material. R&I activity in the region has been promising, he said, highlighting the development of several innovation centers in Saudi Arabia and Abu Dhabi.

“We also see consolidation within the industry. With this more competitive environment, critical mass plays a key role to ensure companies retain and enhance their competitiveness,” Al-Sadoun said, citing the merger between Abu Dhabi’s investment giant Mubadala Development Company and International Petroleum Investment Company (IPIC) to create Mubadala Petroleum & Petrochemicals as an example.

Interview and interactive by Nurluqman Suratman