(MENAFN- Khaleej Times) Even with the Middle East's fertiliser capacity expected to grow to 50.4 million tonnes by 2016, global developments in the petrochemical sector are set to have serious repercussions on the future of the industry, warns the Gulf Petrochemicals and Chemicals Association, or GPCA, the region's longest-standing trade association.
According to GPCA estimates, the GCC's fertiliser production capacity reached 31.4 million tonnes in 2012, a 10 per cent increase on the previous year, while the global fertiliser industry grew by just 2.2 per cent in the same period. Sector growth was aided by ready access to locally sourced oil and gas and further investment in modern infrastructure.
Currently, about half of the fertilisers produced in the GCC are exported abroad. The financial returns benefit Gulf economies but these trade flows may be affected in the near future as more favorably priced raw materials become available to competitors on the back of the North America shale gas boom, the GPCA observes.
"As the economy of the Middle East is so closely tied to the oil and gas industry, any global trends associated with it - be it here, or on the other side of the world - cannot be ignored," said Dr Abdulwahab Al Sadoun, secretary-general of the GPCA.
In 2012, data from the International Energy Agency, or IEA, showed that the United States currently imports 20 per cent of its total energy needs. However, the IEA predicated that advancements in technologies harvesting unconventional hydrocarbons such as shale oil and shale gas could see the US overtake Saudi Arabia as the world's largest oil producer within the next two decades.
The GCC fertiliser industry, in particular, is tipped to be affected by the rise in shale gas production. According to preliminary GPCA estimates, 1.7 million tonnes of fertilisers were exported to North America in 2012, making it the second largest export market for GCC fertilisers after Far East Asia.
"The North American shale gas revolution will give local chemical companies access to cheaper raw materials like nitrogen and sulphur - key components in fertilisers," said Dr Sadoun.
"Fertiliser producers in the GCC may lose ground in an important export market if this happens."
In a bid to support the region's fertiliser industry, GPCA will host the fourth Fertilizer Convention from September 22-24 in Dubai, with discussions centered on tackling global trends. Co-organised by CRU, the independent consultancy group specialising in fertilisers, an audience of over 300 senior industry professionals will benefit from key insights into ensuring the sector's sustained growth.
The influence of US shale gas production on the Middle East's industry will be the main focus in a session entitled "The North American shale gas revolution" on September 23.
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