DUBAI (ICIS)--The chemical companies in the Gulf Cooperation Council (GCC) need to continue to invest in order to secure the industry’s future and maintain its market share, the Gulf Petrochemicals and Chemicals Association (GPCA) said in a report.
“In the region, capex [capital expenditure] of GPCA member companies is on the rise. In 2018, investment reached $3.6bn, up from $1bn in 2017. It is expected to almost double in 2019 to $6.8bn,” said the report released at the 14th Annual GPCA Forum in Dubai.
“On a global level, despite slow economic growth, the chemical industry continues to invest, find opportunities and raise capital at a record high pace. Companies remained optimistic and continued to pour fresh capital of $228bn in 2018,” it added.
This clearly reflects that capex in the GCC lags far behind the overall global investment figures.
“Meanwhile, in the GCC, despite the steady upward trajectory of the current investment cycle, it represented only a minor share of the 1.6% of world’s total in 2018,” the report noted.
Several multibillion-dollar projects planned for the following five years will contribute to an increase in total investment in the region, and these will likely increase the global share in capex in the foreseeable future, the report added.
By and large Saudi Arabia was the largest investor in the GCC chemical industry with $2.9bn of investments made in 2018, representing 82% of the region’s total, and is higher than the country’s share in regional production capacity (68%), according to the figures released in the report.
The Saudi Vision 2030, which aims to provide a boost to the private sector and driving additional growth through industrial development, will mean more investment will be made in the chemical industry.
In the UAE, Abu Dhabi has also outlined its Vision 2030 aiming to expand the private sector.
There are signs of major capital investments in the UAE and, in line with this, Borouge has already undertaken major expansion plans.
Kuwait’s petrochemical companies were responsible for 18% of the GCC chemical investments made in 2018 or $631m.
Many of the investments can be attributed to the implementation of the country’s national development plan, New Kuwait 2035, which targets diversification and enhancing the country’s position in the global petrochemical production, the GPCA said.
While Bahrain is a small producer, its investments in 2018 represented 0.4% of the region’s overall.
Bahrain is one of the most diversified economies in the GCC, with a well established manufacturing industry, which it continues to invest in, te report concluded.
Thumbnail picture: The six countries within
Focus article by Tahir Ikram