(MENAFN- Khaleej Times) Gulf countries' petrochemical industry might face challenges because of falling oil prices, US shale gas and China's polyethylene.
This was echoed by industry specialists at the ninth edition of annual Gulf Petrochemicals and Chemicals Association (GPCA) forum on Monday. The event, which concludes today, attracted more than 2,000 regional and international chemical industry leaders.
"One must not forget the potential impact of China's polyethylene, which could boost its plastic industry and could become a relatively low cost alternative to products from our regions or those products using the North American shale gas," Qatar's Energy and Industry Minister Mohammed Saleh Al Sada said during his keynote address to the conference.
"There is no doubt that these main developments could pose a serious challenge to our region's petrochemical and chemical industry and its competitive edge as a result," the minister said. He also express concern over the recent sharp drop in international crude oil prices and said it could spark economic reviews of downstream projects in the region.
"Oil prices have reached their lowest levels in more than four years, causing concerns that current and future petrochemical prices could be impacted," Al Sada said, adding: "Therefore, downstream project economies are expected to be re-examined and re-assessed, particularly as prices continue to fall and as future forecasts expect a new chapter in the history of oil prices." Earlier Dr Abdulwahab Al Sadoun, secretary-general of the GPCA, said that annual growth in the petrochemicals sector in the GCC was likely to slow down to 7 per cent over the next 10 years, against an average of 13 per cent witnessed over 2003-2013.
Citing reason, the secretary-general said that the slowdown was the growing regional shortage of natural gas. Petrochemicals revenues reached an all-time high in 2013 hitting the $89.4 billion mark, according to the latest industry report GPCA at the 9th Annual GPCA Forum.
Revenues from GCC petrochemicals grew by $6 billion between the 2012 and 2013, resulting in a 7.3 per cent growth. Chemical sales revenue from the Arabian Gulf is the second highest of any petrochemical producing region, after Asia.
"2013 marked a turning point for the worldwide chemicals industry, signalling a return from the global economic downturn," said Dr Al Sadoun.
"And as the region with the second highest rate of sales growth, the GCC has demonstrated that its petrochemicals industry can compete with sector leaders."
Saudi Arabia, the region's largest petrochemical producer, accounted for 74.9 per cent of the region's chemical revenue, roughly $66.9 billion in sales. Qatar's chemical industry generated $11.5 billion in sales.
With analysts forecasting positive growth figures in the near future, regional producers must not be complacent, Dr Al Sadoun advised.
"While the emergence of favourably priced feedstock - an advantage that the GCC chemicals producers have enjoyed over the 30 years-becomes available in other regions as shale oil and gas becomes commonplace, we as an industry need to focus on innovation," continued Dr Al Sadoun. "Growth is assured, but we also need to transform our operations in a way that will make us relevant and profitable 10, twenty, thirty years from now."
"The GPCA has always encouraged informed, thoughtful and open debate on key industry issues. Initiatives like the Fact & Figures report and the Annual Forum are activities that we engage in to demonstrate with audiences across different demographics on what the petrochemical industry has achieved and what it can do in the future," concluded Dr Al Sadoun.
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