Despite being a region blessed with easy feedstock and access to rapidly growing markets, the Middle East still has a long way to go before it can become the world’s leading refining and petrochemicals producer
With back-to-back presentations, a crowded exhibition hall and plenty of meetings on the side, the 8th Annual GPCA Forum was certainly a lot to digest. But there were some very pertinent issues that even the busiest petrochemical engineer would have made time to discuss.
The Middle East, and more specifically the GCC Region, may be among the most active in the global downstream projects market, but that is by no means a guarantee that the future is necessarily a bright one for the region’s chemicals and petrochemicals producers.
The region has now left what Sanjay Sharma, managing director of the Middle East & India for IHS, describes as the “Golden Age” period for the industry. Between 2006-2011 ethylene capacity addition was as high as 16%.
“Year on year, 2007 to 2012 was a fantastic period where the industry was adding capacity. But going forward, in terms of adding capacity, it’s very light,” he said during a presentation about the region’s economic future at the 8th Annual Gulf Petrochemicals & Chemicals Association Forum (GPCA).
“From 2011 to 2016 we expect that growth rates will slow down to 14 per cent, which is a significant slowdown.”
Beyond that, Sanjay expects that capacity additions will slow down to 2 per cent. Admittedly this might be 2 per cent of over 30 million tonnes, a sizeable figure in itself, but nonetheless it could be foretelling of a more competitive future.
“Demand is growing extremely well, but the downstream production capacity increase is much more than what the market can absorb,” said Dr. Ramesh Ramchandran, CEO of MEGlobal at the event.
This year’s GPCA Forum certainly brought forth a number of the challenges that the region’s petrochemicals and chemicals industry faces.
Chief among those are: the region’s limited demand for products, global over- capacity, and the re-introduction of North American petrochemicals companies burgeoned by the ‘Shale boom’. And of course, as local producers look to enter Far Eastern markets, they will have to contend with those manufacturers as well.
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Delegates and speakers from some of the industry’s most influential companies, addressed the many issues, challenges and opportunities which the sector faces, over two days of conferences.
For example, James Gallogly, CEO of LyondellBasell, one of the world’s largest olefins, polyolefins, chemicals and refining companies, explained how the US shale gas evolution would have an impact not only on North American markets, but also Middle Eastern ones as well.
According to a report titled “Shale Game: Impact of the global shale development on the GCC,” there are actually plenty of opportunities for the region’s refiners in the shale boom.
Investments in involved companies, plants and other related projects in North America are an obvious option to participate in the US boom, explains the report published by Stratley that was distributed at the event.
But technology and knowledge transfers will also enable the GCC to more quickly develop its own unconventional gas reserves, whose exploration and development programmes are still in their infancy.
But that does not mean there is no need for local companies to pursue innovation themselves. This was perhaps the most central theme throughout the event, and it was one that a whole wealth of speakers who were willing to discuss at length.
Discussions about innovation came from a variety of fascinating angles. For example, Stephen Pryor, president of ExxonMobil Chemical, discussed Feedstock innovation, while Mark Garret, CEO of Borealis went on at length about Innovation as a way to meet CSR. Even Han-Hong Bang, president and CEO of Hanwha Chemicals, joined in to discuss innovation in partnerships to move downstream and create value.
As the region seeks to boost its refining, petrochemicals and chemicals production capacity, partnerships will only more critical to success and of course, innovation.
Those who managed to pull themselves away from the informative discussions and wander the exhibition hall, or network in the lobby, were able to meet new and existing partners, and form what will hopefully be strong and long-lasting relationships.
