GPCA '17: Industry consolidation key to GCC competitiveness - consultant

Source: ICIS News


GCC countries

DUBAI (ICIS)--Industry consolidation will not only help producers in the Gulf Cooperation Council (GCC) improve their competitiveness but also support the economic development of the region, an industry consultant said on Monday.

Consolidation will allow GCC producers to “build scale” in certain products and help develop market leadership, said Mirko Rubeis, partner and managing director at the Boston Consulting Group.

This is especially important as GCC petrochemical producers are facing several challenges, such as increasing competition from US shale producers, lower oil prices and increasing self-sufficiency in China, he said.

Rubeis was speaking at the 12th Annual Gulf Petrochemicals & Chemicals Association (GPCA) Forum which runs on 27-29 November in Dubai, the UAE.

Consolidation will also the GCC market players to develop focused portfolios in areas such as specialty chemicals, while reducing cost through scale and synergies, he said.

Moreover, consolidation will help increase the competitiveness of smaller, stand-alone companies and create “regional champions” in some product segments which will be better able to compete with global peers, according to Rubeis.

Merging capabilities will also increase the competitive advantage of production clusters such as the large sites in Saudi Arabia’s Yanbu and Jubail, he said.

Consolidation in the GCC industry can be broadened into different avenues other than through mergers and acquisitions, Rubeis said.

Marketing agreements, the outsourcing and sharing of site services as well as the formation of joint ventures for specific projects and products can be utilised to consolidate other than a full merger or acquisition, he added.

Pictured: GCC countries Source: GCC