December saw the largest ever meeting of the Gulf Petrochemicals and Chemicals Association. Refining & Petrochemicals Middle East brings you the highlights.
The fifth annual forum of the Gulf Petrochemicals and Chemicals Association (GPCA), held in Dubai, has attracted more than 1,300 delegates from all over the world, who flocked to Dubai to attend the largest downstream event in the region.
This year’s event was held under the theme of driving value and growth through innovation, and attracted speakers from major regional and global players including Saudi Aramco CEO’s Khalid Al Falih, and Mohammed Al-Mady, CEO of Saudi Basic Industries Corporation (SABIC) and H.E. Sheikha Lubna Bint Khalid Al Qasimi, the UAE minister of foreign trade, along with senior executive of major downstream international players.
Speaking in the opening keynote address, the foreign trade minister said that the gulf region could be the future centre of gravity of the global petrochemicals and chemicals industry, as the industry shifts from mature economies to emerging countries.
“The recent global economic downturn may even have accelerated the eastward migration of production,” said Al-Qasimi.
“Overall, the coming years will see the share of gulf producers in global chemicals production capacity rise further to reach an estimated 16% in 2015 and 20% by 2020,” she said.
“The region will be fuelled by massive domestic and foreign investment inflows, as reflected by the increasing involvement of the world’s major petrochemical players in the GCC,” she added.
The emerging Gulf petrochemical industry faced a major challenge in 2009 and 2010 from protectionist actions by countries such as China and India and the European Union said the minister.
“This is to block imports and protect indigenous industries mainly through the imposition of the anti dumping duties,” she said.
“While we in the Gulf are pleased that some of the cases in China have been closed, we remain concerned about the potential impact of such measures on the development and health of the regional and global industry,” she added.
“That said, we remain committed to free trade and expect all countries to abide by the World Trade Organization (WTO) rules,” she explained.
Her presentation was followed by the presentation of Khalid Al Falih, president and CEO of Saudi Aramco, who outlined a series of ambitious development targets of petrochemicals in the region including a five-fold increase in revenues by 2020, “GCC petrochemical firms have enjoyed three decades of sustained growth and transformed the region from a net importer of chemicals into an export-oriented industry with output of chemicals reaching about US$40bn in 2010,” said Al Falih.
“The GCC is home to more than one-third of the world’s oil and nearly a quarter of its natural gas reserves, enabling us to be a big player in basic petrochemical commodities. But the region lags in downstream development and has a lot of catching up to do,” Al Falih said.
Development of downstream sector to supply specialty and performance chemicals to other industries like automotive and construction is a must, said Al Falih.
“The development of industrial parks surrounding petrochemical facilities is a cornerstone of such a downstream development strategy, and Saudi Aramco is committed to driving that change,” he added.
Al Falih said during his keynote address that the next decade will be a golden age for the region, but players need to achieve more. “Research and Development (R&D), human resources development, and the cultivation of dynamic environment are the key areas of focus for GCC economic development and diversification.”
GCC countries should move beyond their traditional approach to the chemicals business, where every player is fighting for a greater market share in basic commodities such as ammonia, methanol and polyolefins.
“The strategic challenge for the region’s chemicals industry is not to grow from $40bn to $50bn in annual revenue, but to fundamentally alter its economic role within the region, to serve as a true enabling industry for other sectors, and to leapfrog other regions within the global chemicals landscape,” Al Falih said.
Al Falih called on the industry to accept “four stretch targets,” which he believes are essential if petrochemicals and chemicals are to take their place alongside oil and gas as one of the Gulf pillar industries.
Francois Cronelis, vice chairman of the executive committee, president of chemicals at Total, said in his presentation that polymers demand is soaring.
“Polymer demand keeps increasing while oil peaks,” said Cronelis. He also urged companies to be more creative and innovative in order to meet the increased demand and the decline of the feedstock.
“Innovation helps companies to meet market demand like methanol to olefins technology, as methanol can be produced from gas, plastic waste, coal and many other origins,” said Cronelis. “The emergence of bio-feedstock can also help producers meet the shortage of feedstock.”
David Weidman, CEO of Celanese focused in his presentation on the key strategies that need to be implemented in order to compete effectively in the new chemical order and reflected the overarching message of the Forum, driving value and growth through innovation.
“Driving productivity is the main focus of the industry,” said Weidman. “Companies need to focus on three main areas, including geographic, growth and innovation,” he added.
According to Weidman, future change in the chemical industry will be driven by new players and emerging geographic growth. He added that enterprise value can be increased by strategies that drive geographic growth, innovation and productivity.
An insight on the Chinese market was presented by Victor Chu, chairman of First Eastern Investment Group, who stressed that China should sustain its high growth.
“We would like to have a sustainable long term growth of 7% to 8% per year compared to current 10%,” he said. “It is a chemical driven economy, and it has the resources and the will,” he added.
The event was an opportunity for attendees to learn more about the petrochemical industry in Russia. In his presentation, Dmitry Konov, president of the Russian company Sibur LLC, highlighted the situation of the petrochemicals industry in his country including the feedstock situation.
Konov also looked forward and shared strategies for emerging players to compete effectively. He charted out the country’s ambitious plans for industry development, including the building of six clusters of world-class ethylene capacities and how it’s taking advantage of its feedstock potential.
“The high calibre of this year’s speakers, the variety of discussion and debate and the initial feedback from delegates on the last day only proves the point that the GPCA Annual Forum has become the definitive meeting of industry leaders and decision makers. We thank everyone for joining us and are already getting geared up for 2011,” concluded Dr Abdulwahab Al-Sadoun, Secretary General, GPCA.
