Boosting revenues and delivering stability in a rapidly expanding regional downstream market dominated discussions at the first Middle East Chemical Week.
More than 200 delegates from 20 countries participated in the first Middle East Chemical Week conference and exhibition which was held in the Gulf Hotel in Bahrain, under the patronage of Dr. Abdul Hussain Bin Ali Mirza, Bahrain’s Minister of Oil and Gas affairs, and chairman of national oil and gas authority.
This is the first time that the annual Petchem Arabia Conference and the Middle East Fertiliser Symposium have come together and the organisers, the World Refining Association, have claimed the move to be a major success.
Speaking during the inauguration session, Dr. Mirza highlighted the importance of the petrochemicals and the fertiliser industry in the region, and its contribution to the world’s petrochemical industry. “Up to US$50 billion is being invested currently in oil and petrochemical ventures in the GCC states,” said Dr Mirza. “GCC states’ output of the petrochemical products, this year, would amount to 20% of the global production,” he added.
He also shed some light on a series of identical projects aimed at expanding the Bahraini energy sector.
Dr. Alaa Nassif, general manager for strategic planning and investment at the Royal Commission for Jubail and Yanbu delivered a presentation highlighting opportunities for sustainable industrial development in Saudi Arabia’s Madinat Yanbu.
Both Jubail and Yanbu have been conceived to deliver close knit downstream communities and are seeking investors.
Global factors impacting the region’s petrochemicals industry was one of the main subjects discussed during the conference. Dr. Christian Gunther, partner at Mckinsey and Company said that the chemical and petrochemicals industries are pillars of GCC economies and society.
“The industry faces significant challenges,” he said. “GCC chemical and petrochemicals companies need to adapt their strategies according to the governmental aims.”
“The GCC has positioned itself rapidly on the petrochemical world landscape, with strong profitability,” he added. This leading position increased the contribution of these companies in the GDP of the majority of GCC countries. “Petrochemicals producers contribute to GDP through direct, indirect and induced effects.”
Direct contribution is through net profits, wages and taxes, while indirect contribution is via the suppliers of the industry. “The induced contribution is made via spending of dividends, taxes and wages in the country’s economy,” he explained.
But even with this rapid growth, the industry in the region faces several challenges.
“From a market perspective, the GCC is not a natural location to produce chemicals. The market here is small, as the share of the GCC in global petrochemical consumption is only 3%, while the production is 6%,” he said.
Dr. Gunther explained how the decrease in the region’s ethane availability has forced producers to use naphtha as an alternative feedstock which costs more and is less competitive.
The conference was an opportunity for producers to explain their perspective on the impact of new capacities coming on stream, along with the IOCs’ perspective on the fast changing world and petrochemical industry.
“The Middle East and Asia will account for 70% of global capacity growth by 2015,” said Ahmed Albassam, vice president, business development, at National Industrial Company (Tasnee).
“Thirty percent of the capacity will come from the GCC countries plus Iran,” he said. “Meanwhile, Western Europe will continue to see lackluster growth, with basic chemicals and plastics growing less than GDP at about 1.7%” he added.
Asian markets will remain the main destination for Middle Eastern producers. “Asia and mainly China’s appetite for basic chemicals and plastics is unabated, it has shown immense resilience during tough times,” he explained.
“India also has a robust growth rate in basic chemicals and plastics with a strong GDP growth along with diversity in growth and increased foreign investments, these factors will sustain the high growth rate in India,” he said.
Albassam said that the Middle East will witness the growth of selective intermediate and downstream industries on a combination of competitive export economics, proximity of sizable markets and favourable demographics.
“Robust demand from major projects in infrastructure and consumer items will also help in this trend,” he said. The afternoon session focused on key projects and developments in the GCC and North Africa regions.
The session began with a joint case study presentation by the Energy Cities Development Company chairman and executive director, Dr. Abdullah Mahmud on the progress on the US$54bn project in Libya.
“The project was originally due to break ground in 2009, but schedules have slipped and the first petrochemical production units will now begin production in three year’s time,” revealed Dr. Mahmud. The session concluded with a case study presentation by Borouge’s Innovation Centre Manger, Dr. Petri Lehmus on the $70m investment in equipment and facilities.
Mohammed Nasser Al-Hajri, downstream business development and evaluations manager at Qatar Petroleum, in his presentation entitled “the future of the petrochemicals industry in an increasingly tight gas region” said that Qatar is the only country in the Middle East which counts only on ethane in its projects.
“One hundred percent of our projects are based on ethane feedstock, compared to 74% in other GCC [countries] and Iran and only 26% in the rest of the world,” Al-Hajri said. “Propane and butane are also used at 9% of the projects in the GCC and Iran, along with the utilisation of naphtha and NGL,” he aded.
Al-Hajri urged regional producers to be ready to meet the increasing challenges related to the mixed feedstock projects. “These projects will have a higher CAPEX and greater operational complexity,” he observed. “Parallel developments and additional capacities in the Middle East and Asia will also represent a challenge, along with entry barriers and volatility in energy markets and pricing.”
“Increase your profit, flexibility and stability” was the title of the presentation by Youssef Bounouhi, director of the Middle East region at Süd-Chemie, where he highlighted the next generation of acetylene hydrogenation catalysts.
“Plant operators should assess the principals of selective hydrogenation, along with the front end and tail end selective flow schemes,” he explained. “Of course this is by choosing the right type of hydrogenation catalysts for front end and tail design,” he added.
The presentation by Bounouhi was attended by plant operators of SABIC’s subsidiaries and Equate Petrochemical and other regional companies, it was an interactive session between the interlocutor and the attendees, who raised the issues they face mainly with changing the catalysts.
The session was an opportunity to learn from different experiences and to share thoughts and solutions. One of the delegates said that his company changes catalysts once every eight years, while the average time to change the catalysts is five years.
In addition to Süd-Chemie, Haldor Topsoe and Johnson Matthey Catalysts provided separate seminars for their clients explaining the latest developments of the catalysts industry and showcased their products along with case studies of innovative catalysts applied in major downstream processes.
“Having the key technology providers in one room, covering topics related to our industry made this Symposium very worthwhile,” said Ahmed Al Awfi, Deputy CEO, Oman India Fertilizer Company.
“The sharing of views on the future of petrochemicals in the region gave us a great insight into what key decision makers are thinking,” concluded Andy Gibbins, senior VP, manufacturing, International ECHEM.
