Global downstream industry leaders gathered in Riyadh this December for the 2022 edition of the Gulf Petrochemicals and Chemicals Association’s (GPCA) Forum, hosted for the first time by one of the world’s largest chemical companies, SABIC. The event witnessed the largest-ever gathering of industry leaders, senior government officials, traders, researchers, and other key stakeholders in the region.
The forum provided a platform for SABIC to highlight the regional downstream industry’s potential in the global petrochemicals industry, and it participated in leadership dialogue sessions on the agri-nutrient industry’s innovative drive to address the pressing food-security challenges.
Integration, collaboration, and decarbonisation: SABIC
Addressing the three-day forum, the acting CEO of SABIC and the chairman of the GPCA Eng Abdulrahman Al-Fageeh noted that the chemical industry has a long history of addressing challenges of all kinds, and highlighted how these challenges often lead to further opportunities. He referred to three areas in particular that offer possibilities for solutions across the GCC’s chemical industry: Integration, collaboration, and decarbonisation.
Integration
Exploring synergies between the upstream and downstream sectors presents a major opportunity, according to Eng Al-Fageeh, as GCC chemical players are well-positioned due to their competitive manufacturing assets located in close proximity to energy resources.
“The integrated business model has already been proven,” he says. “For example, around 30% of refineries worldwide are integrated with commodity petrochemicals. And some integrated megaprojects are able to convert more than 40% of crude oil barrels into chemical products.” He is also quick to point out out that the greater integration of energy with manufacturing will not only increase the resilience of the chemical industry, but will also add more value to its products and widen net cash margins.
Collaboration
SABIC also believes in partnerships, both within the industry, with companies outside the industry, and with government entities. In the Middle East, more than half of total chemical capacity is run as a partnership and includes a significant exchange of technology and capital with companies, even outside of the GCC. However, the chemical giant acknowledges that the sector needs more collaboration to address the increasing demand for sustainable solutions, and to develop a truly circular economy. This was also endorsed at the G20 summit under the theme ‘reduce, reuse, recycle, and remove’.
Further highlighting the importance of the circular economy, the GPCA Forum launched the GPCA Symposium, themed around ‘Delivering our Plastics Circularity Ambitions’, showcasing the efforts of the plastics industry in enabling a more sustainable and circular future, considering the importance of polymers and plastics within the chemicals and petrochemicals industry.
Eng Al-Fageeh explains that to recycle more products from the value chain, chemical companies must share the risk associated with developing new business models. Through its ambition to prioritise value chain players – a critical aspect of SABIC’s vision to bring innovation to customers, the firm recently teamed up with Guangdong Jinming Machinery, a plastic packaging equipment maker, and Bolsas de los Altos, a plastic film and packaging converter, to support polyolefin based innovative applications in flexible packaging.
Additionally, the partnership will address sustainability challenges and its commitment to circularity for plastics by providing an outlet to test and validate the performance of its products while bringing game-changing innovations to market.
Furthermore, GPCA is also working broadly with policymakers, consumer-goods companies and retailers in the region to develop regulations and standards that support the recycling of plastic materials.
Decarbonisation
SABIC’s commitment to decarbonisation is no secret. Addressing climate change and reducing the emission of CO2 is one of the most significant challenges faced by the international community. Taking this a step further, SABIC built a mega CCU plant at UNITED – a SABIC affiliate – which uses proprietary technology to capture 500,000 Mt of CO2 per year. This CO2 is captured from the production of ethylene glycol and converted to feedstock for industrial processes, diverting it from being emitted into the atmosphere.
Eng Al-Fageeh also comments that clean hydrogen production is particularly relevant to the GCC as part of its wider plans to remove carbon from the environment. “The carbon footprint of conventional methane-based hydrogen production can be shrunk by capturing and permanently storing the carbon dioxide by-product,” he says. “Another alternative is to make hydrogen from the electrolysis of water using renewable electricity.
“The GCC has the methane; the underground storage facilities; the renewable-electricity potential; and the know-how along with policy support to make this happen,” Eng Al-Fageeh adds.
Besides integration, collaboration, and decarbonisation, SABIC highlights two additional, crucial factors – innovation and talent, particularly young talent. This was also emphasised by HRH Prince Abdulaziz bin Salman Al-Saud, Saudi Minister of Energy, during his inaugural address at the GPCA Forum, where he emphasised the role of local talent in shaping a sustainable future for the chemicals and petrochemicals industry. According to GPCA research, GCC chemical revenue soared by 77.2% in 2021, compared to the previous year, the highest level recorded since 2013. The spike was due to a post-Covid recovery that led to increased demand and high chemical prices globally. At the same time, chemical revenue grew from $54.1 billion in 2020 to $95.9 billion in 2021. This points to the regional industry’s growing importance and global scale in a shifting market landscape.
Held under the theme ‘Chemistry in Action, Shaping a Sustainable Future’, the GPCA forum provided opportunities for industry leaders to address issues of global importance, including charting a path to net zero and the energy transition, food security, capability building, and forging avenues for a sustainable future through collaboration.
According to the International Energy Agency, direct CO2 emission from primary chemical production amounted to 925 Mt in 2021 globally – a 5% increase compared to 2020. Meanwhile, in the GCC, average CO2 intensity increased by 3% in 2021 as emissions rebounded since Covid-related lockdowns in 2020. Nonetheless, CO2 intensity has stayed on a declining trend since 2013.
In line with this, the overarching theme at the 16th GPCA Forum was how the petrochemicals industry can achieve its net-zero ambitions by 2050 while focusing on growing its utilisation of renewables, improving its energy efficiency, reducing its emissions, and capitalising on new markets for carbon and other by-products as part of the circular economy.
Indeed, the 2022 edition of the GPCA Forum saw the launch of the GPCA Youth Forum, under theme ‘For the Youth, By the Youth as a platform for knowledge sharing with university students and young working professionals within the industry.
Furthering the theme of sustainability, the GPCA Forum also saw HE Dr Mohamed Bin Mubarak Bin Daina, Minister of Oil & Environment, Special Envoy for Climate Affairs for Bahrain and HE Saad bin Sherida Al Kaabi, Minister of Energy for Qatar, share the stage with the Saudi Energy Minister to address the pressing topic of balancing net-zero ambitions in the energy sector with growth.
The agri-nutrients industry
SABIC is also a significant player in the fertilisers industry and supplies customers with various agri-nutrient products, helping address the ever-growing global demand for food. Product ranges include urea, ammonia, and a comprehensive portfolio of nitrogen-based inorganic products.
SABIC Agri-Nutrients’ CEO Abdulrahman Shamsaddin spoke at the GPCA Forum about the agri-nutrient industry’s importance and innovative drive in mitigating the unfolding food crisis. “We come with a piece of hope,” Shamsaddin noted, and pointed towards how different stakeholders can work together and develop a platform that will enable the supply chain of agri-nutrients to reach the right region, at the right time, with the right price.
He noted the need to open up and have the proper free trade channels regarding food value chains, including agri-nutrients. Continuing, he spoke of the importance of ensuring that the industry’s narrative is aligned with how it is part of the solution, and how the industry should be on the right side of history, including how much the agri-nutrient sector is innovating to provide more efficient and sustainable fertilisers.
In line with this, representing a new milestone in the development of decarbonisation solutions, SABIC Agri-Nutrients and Aramco shipped 50 kilometre-tonne of blue ammonia from Saudi Arabia to South Korea. This is also the world’s first commercial shipment of its kind and represents a remarkable milestone for a low-carbon alternative to conventional grey ammonia and SABIC Agri-Nutrient’s journey towards carbon neutrality.
Shamsaddin elaborated on committing to innovation, because, according to him, “that’s going to be the differentiator for us to achieve the targets, be realistic, and ready to walk the talk.” He also highlighted the industry’s journey towards sustainability and circular economy as well as its prerogative on regional collaboration, but with a global agenda.
Looking towards the future
Operating in more than 50 countries globally, SABIC has patents, pending applications, and significant research resources globally. It reported a net profit of $6.15 billion (SAR 23 billion) in 2021, while sales revenues for the same year totalled $46.6 billion (SAR 174 billion).
Unrelenting in its approach towards integration, collaboration, and decarbonisation, the company supports its customers by identifying and developing opportunities in critical end-use applications and making distinctly different kinds of products while supporting and favouring sustainability and carbon neutrality.
A recent example of its collaborative spirit is the tripartite joint development agreement the company entered into with Aramco, and PKN ORLEN, Poland’s top energy group, to assess the technical and economic feasibility of a potential petrochemical project in Gdansk.
SABIC is also developing new processes and technologies to reduce greenhouse gas emissions and fossil-fuel consumption, for which it signed an agreement with German chemical major BASF and global EPC firm Linde. Accordingly, the three partners have begun the construction of the world’s first demonstration plant for large-scale electrically heated steam cracker furnaces.
SABIC’s efforts to improve the chemical and petrochemical sector were demonstrated at GPCA through an interactive booth projecting its petrochemicals, technology and innovation, and corporate social responsibility initiatives.
The interactive booth allowed visitors to learn more about the company and the industry’s efforts to meet the needs of a sophisticated marketplace through smarter product design and functionality, and greater sustainability.
