DUBAI (ICIS)--The petrochemical industry in the Middle East will need to bring about “fundamental changes” in the way they do business and operate in order to meet the current challenges faced by them, Yousef Al-Benyan, CEO of Saudi chemical major SABIC, said on Tuesday.
“The fundamental change required to deliver quantum leap in performance is transformation; it is not an incremental improvement but a drastic change in the way we operate and conduct business,” Benyan declared at the opening of 12th Annual Forum Gulf Petrochemicals and Chemicals Association (GPCA).
“One thing we know for certain; the Status Quo is not an option,” said Benyan, who is also the chairman of GPCA.
Some of the key challenges faced by the industry included the low crude oil price environment – which will stay for years to come – China’s rise to self-sufficiency, shale-enabled US petrochemical expansion competing with GCC and lower ethylene margins.
“Besides these fundamental challenges, we continue to experience fast-paced disruptions – caused by technology and recent political and economic development in the US, Europe, China and elsewhere,” Benyan said.
“Times are changing very fast and we have to adapt even faster.”
Benyan cited some leading global chemical companies having taken action to address these challenges, including mergers and acquisitions, consolidation, divesting non-core businesses and effective managing portfolios.
“I especially want to draw your attention to the unprecedented wave of mega-deal mergers and acquisitions we are seeing in the industry.
“We are seeing the largest mergers in the history of the chemical industry. Indeed, ICIS projects that 2017 might be the biggest year for petrochemical mergers ever,” Benyan noted.
The transformation journey may seem hard, but holds many rewards and the organisations will need to commit to drive the change.
They will have to be fit before they start their transformation by effectively managing costs; making organisations lean and focus; building best-in-class capabilities in commercial, manufacturing and supply-chain management.
“Organisations need to think big, be innovative and fast to capitalise on opportunities by taking the right actions,” he added.