GPCA ’21: Chemicals must navigate ‘tension’ between declining oil and robust downstream – GPCA chairman
DUBAI (ICIS)–Chemicals are currently caught up between the declining oil and gas industries and thriving downstream, consumers sectors still requiring the products manufactured by petrochemicals plants, the chairman of the Gulf Petrochemicals and Chemicals Association (GPCA) said on Wednesday.
Yousef Al-Benyan, who is also the CEO at Saudi petrochemicals major SABIC, added that after two years of COVID-19 pandemic and expansion plans postponed, it was time again to press the accelerator, but this could only be done in a more sustainable way.
“Chemicals companies’ 2021 earnings outlook is promising again. It’s time to release the brake and accelerate. But a tension is building – utilities companies across the world anticipate growth below global GDP growth, while consumers industries forecast growth above GDP,” said the GPCA chairman.
“This tension between upstream and downstream will have to rely on the competitiveness of chemicals companies, and the companies unable to navigate that tension will disappear in coming decades.”
Al-Benyan was delivering his opening speech at the GPCA’s annual forum.
PRESSURE TO DECARBONISE SET TO
The GPCA chairman said the two years of pandemic have shown digitalisation could also help chemicals companies, which have been able to navigate the uncertainty remarkably well.
In another session at GPCA on Tuesday, a panel of experts said that the chemicals industry is yet to take full advantage of digitalisation and the way it could improve their operations.
The GPCA chairman on Wednesday added that the good work done during the pandemic in terms of digitalisation should not make the industry rest in its laurels, however.
“Let’s take pride in the way we implemented digital tools during the pandemic. However, bigger challenges for our industry [remain]: climate change hasn’t gone away, and, in fact, it poses a huge challenge for the world … The pressure to decarbonise the global economy is growing,” he said.
“Around 80% of the world’s GDP is generated in countries that have pledged to go carbon neutrality. There is a clear policy direction and capital allocation and, therefore, there is an attractive [approach] for decarbonisation for oil and gas upstream companies.”
Al-Benyan said that the chemicals industry has already been decarbonising for more than two decades but added that more should be done.
Better technologies would be needed to “galvanise our assets”, said the GPCA chairman, to make the chemicals industry operations more efficient and reliable, because there is a clamorous demand from those who use its products in downstream industries.
“Our customers are insisting on more sustainability in our business and in everything we do. Banks and other lenders [are also questioning] how we are managing our sustainability. On top of this, there are global macroeconomic challenges, which will affect the global supply chain and encourage more protectionism,” said Al-Benyan.
“The energy transition’s timeline has been shortened, and the result of that acceleration puts much more pressure on us [chemicals industry]. But I am confident that, in these uncertain and challenging times, industry leaders will re-shape their value chain. We have been talking about transforming the industry for several years: this is the time.”
The GPCA 15th annual forum runs in Dubai, United Arab Emirates (UAE), on 7-9 December.
Front page picture: GPCA’s chairman
delivering the annual forum’s opening