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Gulf petrochemicals standing tall to face invisible peril
25
Jun '08
Mr Abdullah Bin Zaid Alhagbani
Mr Abdullah Bin Zaid Alhagbani
With the rising demand for petrochemical products world over, this industry, in recent years, has witnessed a significant growth, as many countries across the globe have increased their production capacity by manifolds.

By the year 2010, few major petrochemical projects will start their operations in China and Middle East countries. Such situation has risen concern for the Gulf countries, which till now is one of the major supplier for Petrochemical and chemical products throughout the world.

Ethylene, the basic petrochemical product used in the manufacturing of a varied range of plastics and synthetic fibres, will see a sharp demand in the near future. To meet the requirement, various countries throughout the planet, are adding up production facilities and the Gulf countries are not lagging behind in this race.

To understand the gravity of the situation, Fibre2fashion contacted Mr Abdullah Bin Zaid Alhagbani, Secretary General, Gulf Petrochemicals & Chemicals Association (GPCA).

Discussing about the upcoming petrochemical projects in China and Middle East, Mr Alhagbani, candidly said, “Both regions have established a strong position in terms of demand, investment and production; so they complement each other. Some businesses carry with them an element of volatility, as we approach 2010, however producers in the Gulf are likely to ride through the turbulent period of oversupply better than others.”

While shedding a light on the present scenario of the Gulf petrochemical industry, Mr Abdullah said, “In the context of investments, the Gulf is the world's first choice for new petrochemical production facilities and perhaps the best choice for investment. In GCC alone, energy related project CAPEX forecasts show a strong growth of 55 percent from US $213 billion over the 2005-2007, to $333 billion during the period 2008-2010. This combined with government commitment, industrial infrastructure, proximity to high growth markets and current and future feedstock price advantages, has put the region in an advantageous position. Given this backdrop the industry is seeing a migration to low cost area of production which the Gulf is offering now, so the scenario seems ready for solid growth.”

Rising oil prices in the international market is building pressure on the down stream users. This must have affected the Gulf petrochemical industry. In this regard, the Secretary General opined, “Of course the rising oil prices reinforced the importance of this region to the petrochemical industry as a center of global production facilities. In Asia and Europe, Naphtha is linked to oil prices; with costs shooting up to the current level, Naphtha will have to adjust pushing prices even higher, so the supply of petrochemicals from the Gulf will help to fill in the gap.”

However, of course, with the upcoming projects in the Middle East and China, the competition is bound to rise. According to GPCA Secretary General, Gulf producers have grounded a strong position in Asia, where they were less established before 2002. Investments in both regions have grown tremendously and but currently Gulf is in a stronger position as compared to other regions.

Like many sectors, the petrochemical industry is evolving with manufacturing shifting as markets mature, Gulf producers are poised to play a major role in the future and remain open to further investments.

Fibre2fashion News Desk - India

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