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Petrochemical Industry Gearing up to Tackle Difficult Times Ahead

DUBAI — The petrochemical industry is faced with manifold challenges in the wake of global financial crisis; hence the sector is approaching a period of over capacity that is accompanied by a weaker market, observes Abdullah bin Hamad Al Attiya, Deputy Prime Minister of Energy and Industry, Qatar.

“At the same time, we are witnessing an unforeseen change in world economic growth that is driven by a slowdown in the GDP growth in the developed world, particularly in the US. The financial crisis in America and Europe is making the situation further worse,” he said in a keynote speech.

He noted that various challenges facing the industry today includes increasing global competitiveness, changes in the energy environment, economic growth and cyclically, geopolitical issues and increasing environment concerns.

He however, expressed his confidence in the capabilities of the industry that help overcome the challenges facing the petrochemical industry.

The Third annual forum of the Gulf Petrochemical and Chemicals Industry Association (GPCA) opened on Wednesday in Dubai with a line-up of prominent industry figures and experts from around the world to give an insight to the delegates about the impact of the global financial crisis and ways of meeting the future challenges ahead in the region’s petrochemical and chemical sectors.

Attiya, observed that the conference is taking place at a time when the world is witnessing dramatic changes in the oil market. The oil price reached to its highest ever level in July-August 2008, and now it is selling at below $50 per barrel.

He further informed that the total global ethylene capacity is projected to be 160 million metric tonnes by the 2012 with the GCC’s share in the global ethylene market expected to grow to 15 per cent in 2012 from 7 per cent from the seven per cent in 2002.

“The most important challenge facing the region, Attiya says is meeting the energy and feedstock needs with growing demand of petrochemical usage in daily life which is placing tremendous pressure on feedstock supply in the region.

“It is understood that additional associated gas from our oil resources in the region is expected to only grow at incremental rates, yet the availability of methane from non-associated gas is expected to grow. We have to use our natural gas resources very strategically for energy and petrochemical projects,” he opined.

Hassan I Ahmed Managing Director, HSBC Securities, USA, made a thought- provoking presentation of the financial situation on where the global chemical sector goes from here. He was quite optimistic that despite the downturn, the industry has great potential to out perform handsomely. In his view, the industry will recover in next 18 months, and the Middle Eastern producers will be well placed in the market. He however suggested that consolidation and integration is what’s most required at this point of time.

Speaking to Khaleej Times, Al Mohammed H Al Mady, Chairman, GPCA, observed that “we need to exploit the utilisation of gas reserves by adopting advance technology.

· aneela@khaleejtimes.com